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Refunds for Tariffs & Dropping FIFA Convictions · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June grosseol from Bloomberg Radio.
0:08
Speaker 1: President Trump was highly critical of a Supreme Court's decision
0:13
Speaker 1: last month striking down the tariffs he imposed under the
0:16
Speaker 1: International Emergency Economic Powers Act or AIPA. Wouldn't you think
0:21
Speaker 1: they would have put one sentence in there saying that.
0:24
Speaker 2: Keep the money or don't keep the money? Right, I
0:27
Speaker 2: guess it has to get litigated for the next two years.
0:30
Speaker 1: The decision was silent on the question of refunds. It's
0:35
Speaker 1: up to the US Court of International Trade to determine
0:38
Speaker 1: what refunds will be available for the almost one hundred
0:42
Speaker 1: and seventy billion dollars in global tariffs collected, how they'll
0:46
Speaker 1: be doled out and to whom. And Even though the
0:50
Speaker 1: administration says its web based portal to handle refund requests
0:55
Speaker 1: is about seventy percent complete, more than two thousand lawsuits
0:59
Speaker 1: have already been filed by companies seeking refunds, and a
1:04
Speaker 1: new wrinkle last week, as a Costco member sued the retailer,
1:08
Speaker 1: saying it should reimburse all customers who paid higher prices
1:13
Speaker 1: on its products because of Trump's tariffs. It's one of
1:16
Speaker 1: at least five proposed class action cases identified by Bloomberg
1:21
Speaker 1: News where a customer is suing a company to get
1:24
Speaker 1: tariff refunds. My guest is Timothy Bright Bell, a partner
1:28
Speaker 1: and co chair of the International Trade practice at Wiley
1:32
Speaker 1: Rhyin Tim the Supreme Court didn't give any specifics at
1:36
Speaker 1: all about refunds, but Judge Eaton of the Court of
1:40
Speaker 1: International Trade has said that every single cent of tariffs
1:45
Speaker 1: collected under AIPA has to be returned. Has the Trump
1:49
Speaker 1: administration agreed with that?
1:52
Speaker 2: So the Justice Department has agreed, and Customs and Border
1:57
Speaker 2: Protection has agreed. It's not entirely clear that the White
2:02
Speaker 2: House has agreed so, but the way this is proceeding
2:06
Speaker 2: now in front of Judge Eaton, when he said all
2:11
Speaker 2: importers of record whose entries were subject to IEPA duties
2:14
Speaker 2: are entitled to the benefit of the learning resources decision,
2:19
Speaker 2: that was very clear in the order that was issued
2:21
Speaker 2: on March fourth. Since then, Customs and Border Protection gave
2:27
Speaker 2: a response asking for forty five days to implement functionality
2:33
Speaker 2: for its automated service called ACE. So Judge Eaton, who
2:39
Speaker 2: originally ordered immediate refunds, rescinded that order. He then asked
2:45
Speaker 2: for weekly status reports, so Customs and Border Protection has
2:48
Speaker 2: been giving him updates. There was one on March twelfth,
2:52
Speaker 2: there will be another one on March nineteenth, So the
2:55
Speaker 2: process is moving along. Customs is building the refund system
3:00
Speaker 2: that will be needed, and hopefully if that is created,
3:03
Speaker 2: it will be less messy than otherwise could be, so.
3:07
Speaker 1: The whole process will be automated.
3:10
Speaker 2: That's the intent. Yes, so Customs, when it collects duties,
3:15
Speaker 2: has an automated system for that that brokers and others
3:19
Speaker 2: can access. Again, this ACE system, and so if you
3:24
Speaker 2: can re engineer that, you could potentially provide refunds in
3:29
Speaker 2: a quick and efficient and organized way, which would be
3:33
Speaker 2: ideal and that would potentially make everyone's lives easier. But again,
3:38
Speaker 2: the system is still being built. We don't know for
3:40
Speaker 2: sure what challenges or delays there might be in that,
3:43
Speaker 2: but so far, at least the system seems to be
3:47
Speaker 2: under control or in progress.
3:49
Speaker 1: So then if the system is in place and things
3:52
Speaker 1: are going forward, why have thousands of companies still filed
3:57
Speaker 1: lawsuits at the Court of International Trade.
4:01
Speaker 2: Well, it's a great point, and even after Judge Eaton's decision,
4:06
Speaker 2: additional companies have filed at the Court of International Trade,
4:10
Speaker 2: including some of our clients. So, as I said, Customs
4:15
Speaker 2: and the Justice Department seem committed to this, but there
4:18
Speaker 2: hasn't been a one hundred percent commitment from the White
4:23
Speaker 2: House and the administration about willingness to facilitate tariff refunds.
4:27
Speaker 2: So there's some uncertainty whether the government will in fact
4:33
Speaker 2: pay everyone that paid IEPA tariffs, or if a lawsuit
4:37
Speaker 2: might be required for some reason. So I think that's
4:40
Speaker 2: why some companies are filing. In addition, and this is
4:43
Speaker 2: very much a company by company decision, but once the
4:46
Speaker 2: Supreme Court decision was made, the potential political risk became
4:50
Speaker 2: much lower, and the costs of filing are not particularly great.
4:54
Speaker 2: So all of those things lead to companies continuing to
4:58
Speaker 2: file lawsuits even while this refund automated process is being built.
5:02
Speaker 1: So the judges said that all importers of record whose
5:06
Speaker 1: entries were subject to IEPA duties are entitled to refunds,
5:11
Speaker 1: regardless of whether or not they'd suit the government, but
5:14
Speaker 1: the government will not pay refunds to the final commercial
5:18
Speaker 1: customer or the individual consumer. But there are already at
5:22
Speaker 1: least five proposed class actions by customers against retailers. So,
5:29
Speaker 1: for example, last Wednesday, a Costco member sued the retailer
5:34
Speaker 1: saying it should reimburse all customers who paid higher prices
5:38
Speaker 1: on its products because of the tariffs. That looks like
5:43
Speaker 1: a very messy lawsuit. I'm not even sure how they
5:46
Speaker 1: would work out the numbers.
5:47
Speaker 2: Yes, as predicted by Justice Barat, it could be very messy.
5:51
Speaker 2: The importer of record, of course, is the entity that
5:54
Speaker 2: pays the tariffs, and therefore it is the importer of
5:58
Speaker 2: record who is entitled to the refunds. But that does
6:02
Speaker 2: not address the question of customers who paid higher prices.
6:05
Speaker 2: They are not necessarily entitled to those refunds directly. Now,
6:10
Speaker 2: over the weekend, the US Trade Representative Jamison Greer said
6:14
Speaker 2: that retailers should seek to pay customers refunds. But this
6:21
Speaker 2: is why you've seen this new wrinkle of class action
6:24
Speaker 2: suits being filed against Costco and FedEx and the maker
6:28
Speaker 2: of raybands. These were some of the first companies to
6:32
Speaker 2: file suit at the Court of International Trade for the
6:35
Speaker 2: refunds in the first place. Now they are the first
6:37
Speaker 2: targets for these consumer class actions.
6:41
Speaker 1: How strong are those consumer class actions? It seems to
6:45
Speaker 1: open up the courthouse doors to just about everybody in
6:49
Speaker 1: the country who paid more because of the tariffs.
6:52
Speaker 2: Yes, this could be a very messy process, and it
6:56
Speaker 2: doesn't involve just consumers. Think about businesses that arrange with
7:01
Speaker 2: another entity to have bought certain goods for manufacturing, paid
7:05
Speaker 2: a higher price through the importer of record. Well, now
7:08
Speaker 2: the importer of record gets the money back, and yet
7:11
Speaker 2: it's the manufacturer who paid the importer of record who
7:15
Speaker 2: should ultimately get the benefit of that. So it does
7:19
Speaker 2: seem like this will be a messy process, and it
7:22
Speaker 2: is very difficult to demonstrate what percent of AIPA tariffs
7:27
Speaker 2: were passed on to customers were passed on to consumers
7:30
Speaker 2: in a way that would allow for orderly refunds. So again,
7:34
Speaker 2: it may be each company trying to sort this out
7:37
Speaker 2: in some way or trying to make consumers whole to
7:41
Speaker 2: the best extent possible.
7:42
Speaker 1: Is there any precedent for a lawsuit like that, you know,
7:46
Speaker 1: the customers against Costco, etc.
7:49
Speaker 2: This is very unusual in the trade space. I am
7:51
Speaker 2: not aware of similar sort of consumer class action suits
7:56
Speaker 2: comparable to this. But then again, when you have more
7:59
Speaker 2: than one hundred seven billion dollars at stake. You're going
8:02
Speaker 2: to find lawyers and law firms that might have clients
8:06
Speaker 2: who feel they are entitled to some share of that money.
8:08
Speaker 1: Once this website is up, this portal, is it going
8:12
Speaker 1: to go like one, two three, here's my documentation, put
8:15
Speaker 1: it through or is it going to be more steps
8:18
Speaker 1: after that?
8:19
Speaker 2: It could be a relatively straightforward process. Again, since the
8:22
Speaker 2: importer of record is the one who paid the duties
8:26
Speaker 2: in the first place, and they have automated records through
8:29
Speaker 2: customs of all of those entries, the dates that the
8:33
Speaker 2: entries were made, and the amounts of money, including tariffs,
8:37
Speaker 2: that were paid. That piece of it could be relatively
8:40
Speaker 2: straightforward when it is just reversed back to refund the
8:44
Speaker 2: tariffs to those importers of record. Anything beyond that it
8:47
Speaker 2: gets much more complicated very quickly.
8:50
Speaker 1: Now President Trump has moved to replace those IIPA tariffs,
8:55
Speaker 1: and there are lawsuits already challenging those ten percent tariffs,
9:00
Speaker 1: including by two dozen US states. Tell us about those lawsuits.
9:06
Speaker 2: Yes, sure. So. This is section one twenty two of
9:09
Speaker 2: the Trade Laws, which is a law intended to address
9:12
Speaker 2: a balance of payments deficit, and it does allow the
9:17
Speaker 2: President to impose tariffs of up to fifteen percent for
9:21
Speaker 2: up to one hundred and fifty days, which would be
9:23
Speaker 2: July twenty fourth. President Trump imposed ten percent tariffs. He
9:27
Speaker 2: did threaten to go to fifteen percent, but so far
9:31
Speaker 2: that has not happened yet in response quickly, You're correct.
9:35
Speaker 2: There were lawsuits filed by twenty four states on March fifth,
9:40
Speaker 2: and those have also were filed at the Court of
9:43
Speaker 2: International Trade and will be heard by a three judge
9:47
Speaker 2: panel that includes the Chief Justice, Mark Barnett, and the
9:52
Speaker 2: process will move quickly. There is a motion for summary
9:56
Speaker 2: judgment that was filed last Friday. There will be a
9:59
Speaker 2: hearing on April tenth. So the lower courts appear to
10:04
Speaker 2: want to move quickly, just as they did on the
10:06
Speaker 2: Ayapa tariffs. Now that being said, the tariffs are only
10:10
Speaker 2: in place until July twenty fourth, and it's certainly not
10:14
Speaker 2: clear that you could get through all of the stages
10:16
Speaker 2: of courts and appeals before that July twenty fourth, when
10:20
Speaker 2: those tariffs would have to come on.
10:22
Speaker 1: And what is the theory of the states and others
10:25
Speaker 1: suing well.
10:27
Speaker 2: The basic theory is that the United States does not
10:30
Speaker 2: have a balance of payments deficit, that it has a
10:33
Speaker 2: trade deficit, but balance of payments takes into account many
10:37
Speaker 2: other factors, and when you look at those other factors,
10:40
Speaker 2: in their view, the United States does not have a
10:43
Speaker 2: balance of payments deficit or emergency that would justify these
10:48
Speaker 2: types of teriffs.
10:49
Speaker 1: Do you think that's a good argument.
10:50
Speaker 2: By the way, personally, not speaking for my law firm
10:54
Speaker 2: or my clients, I do think it is a credible argument.
10:58
Speaker 2: And there is nearly a difference between trade deficits and
11:02
Speaker 2: balance of payments deficits, and so I expect the court
11:06
Speaker 2: is going to give the government a very hard time
11:08
Speaker 2: at this quring on April.
11:10
Speaker 1: Tenth, Coming up next on the Bloomberg Lawn Show, I'll
11:13
Speaker 1: continue this conversation with trade attorney Tim Brightbell. President Trump
11:18
Speaker 1: has tried to replace the AIPA tariffs. We'll talk about
11:21
Speaker 1: some of the obstacles. I'm June Grosso and you're listening
11:25
Speaker 1: to Bloomberg. President Donald Trump took to truth Social on
11:33
Speaker 1: Sunday night, contending that he has an absolute right to
11:37
Speaker 1: impose tariffs and criticizing the Supreme Court's decision striking down
11:43
Speaker 1: the tariffs he imposed under the International Emergency Economic Powers
11:48
Speaker 1: Act or AIPA quote. The decision that mattered most to
11:52
Speaker 1: me was tariffs. The court knew where I stood, how
11:55
Speaker 1: badly I wanted this victory for our country, and instead
11:59
Speaker 1: decided to potentially give away trillions of dollars to countries
12:04
Speaker 1: and companies who have been taking advantage of the United
12:07
Speaker 1: States for decades. I've been talking to trade expert Timothy
12:11
Speaker 1: Brightbill of Willie Rhyan Jim tell us about the other
12:15
Speaker 1: ways that Trump administration is trying to impose tariffs.
12:20
Speaker 2: Well, and again, the goal is to have something in
12:23
Speaker 2: place by the time that these Section one twenty two
12:26
Speaker 2: tariffs would expire in late July. So last week, the
12:30
Speaker 2: US Trade Representative announced two new sets of investigations under
12:35
Speaker 2: section three oh one of the Trade Laws. Section three
12:38
Speaker 2: oh one is the same law that the first Trump
12:41
Speaker 2: administration used to impose tariffs on hundreds of billions of
12:46
Speaker 2: dollars of goods coming in from China, and those tariffs
12:49
Speaker 2: are still in place. So the two investigations that were
12:53
Speaker 2: announced related first of all to structural overcapacity and overproduction,
13:00
Speaker 2: and these are country specifics. So the US Trade Representative
13:04
Speaker 2: is going to investigate structural excess capacity or production in
13:09
Speaker 2: twenty seven countries, and then followed a day or two
13:14
Speaker 2: later by another investigation into forced labor practices and in
13:20
Speaker 2: particular what other countries are doing to prevent goods that
13:23
Speaker 2: are made with forced labor from being imported or sent
13:27
Speaker 2: onto the United States. That investigation is going to cover
13:30
Speaker 2: sixty countries. There will be a very accelerated time frame
13:34
Speaker 2: for these, so there will be comments that are due
13:39
Speaker 2: starting almost now and due by April fifteenth, and then
13:44
Speaker 2: the US Trade Representative will have hearings on the forced
13:47
Speaker 2: labor issue beginning April twenty eighth, and on the structural
13:51
Speaker 2: overcapacity beginning May fifth, So again we have an accelerated
13:56
Speaker 2: time frame to try and have some of these investigations
14:00
Speaker 2: included by the late July timeframe.
14:03
Speaker 1: Are there other national security investigations underway?
14:08
Speaker 2: Those are still underway as well a number of Section
14:11
Speaker 2: two thirty two investigations. This was the tool in the
14:14
Speaker 2: toolbox that has been used to impose tariffs on steel
14:18
Speaker 2: and aluminum imports from a number of countries. Those tariffs
14:22
Speaker 2: are still in place, but there are a variety of
14:25
Speaker 2: ongoing Section two thirty two investigations covering everything from critical
14:31
Speaker 2: minerals to pharmaceuticals, to solar polysilicon and related products like
14:36
Speaker 2: solar cells and modules. So here the Commerce Department has
14:41
Speaker 2: to do a report on whether imports are a threat
14:43
Speaker 2: to national security. Then the president has ultimate discretion as
14:47
Speaker 2: to what remedy to put in place.
14:50
Speaker 1: When we were talking about the tariffs under AIBA, it
14:53
Speaker 1: seemed as if most experts were saying, well, you know,
14:56
Speaker 1: the president could use this, the president could use that,
14:59
Speaker 1: but it seems like everything that the president is using
15:02
Speaker 1: is under either investigation or some long term process.
15:07
Speaker 2: Well, I would say that the courts have upheld generally
15:12
Speaker 2: the president's ability to use these national security tariffs under
15:16
Speaker 2: Section two thirty two, as well as the Section three
15:19
Speaker 2: oh one tariffs depending on the situation. So there is
15:22
Speaker 2: more discretion for the president in these circumstances, as opposed
15:27
Speaker 2: to the IEPA tariffs, where Chief Justice Roberts concluded that
15:32
Speaker 2: AIPA does not give the president this unbounded power to
15:36
Speaker 2: unilaterally impose tariffs. In fact, he found that that view
15:41
Speaker 2: would represent a transformative expansion of the president's authority over
15:46
Speaker 2: tariff policy. So I think there are tools in the
15:49
Speaker 2: toolbox that the courts have upheld doesn't mean they will
15:53
Speaker 2: necessarily uphold the use of them in these situations.
15:56
Speaker 1: Was there anything in that Supreme Court decision that you
15:59
Speaker 1: found very surprising?
16:02
Speaker 2: Well, I think the decision was in line with our
16:05
Speaker 2: expectations as far as winning. We thought it would come out.
16:07
Speaker 2: We thought it would be a five to four or
16:09
Speaker 2: a six to three decision. I do think the Chief
16:12
Speaker 2: Justice writing the main opinion and finding that all tariffs
16:16
Speaker 2: under AEPA were illegal, not just some tariffs like maybe
16:21
Speaker 2: the fent and all tariffs were legal, but the worldwide
16:23
Speaker 2: reciprocal tariffs were not. And then I also thought it
16:26
Speaker 2: was very interesting to see the debate on the Major
16:29
Speaker 2: Questions doctrine, where Justice Gorsich made a full defense of
16:34
Speaker 2: that doctrine and credited that for why he voted the
16:37
Speaker 2: way he did, whereas Justice emy Cony Barrett basically said,
16:42
Speaker 2: this is a textual issue. If you read the text
16:44
Speaker 2: of AEPA, it does not allow tariffs, so you don't
16:47
Speaker 2: have to get into the Major Questions doctrine.
16:49
Speaker 1: President Trump recently said it's going to take five years
16:52
Speaker 1: before all this refund stuff gets settled out. I mean,
16:56
Speaker 1: what's your prediction or assessment of how long this is
17:00
Speaker 1: going to take this process.
17:02
Speaker 2: I think it will be a relatively orderly process for
17:05
Speaker 2: getting money back to importers of record. But I agree
17:09
Speaker 2: that if the goal is to get money back to consumers,
17:12
Speaker 2: that will be longer and messier and could take quite
17:16
Speaker 2: some time. But the building blocks of this custom system
17:19
Speaker 2: seem to be moving along. We're keeping an eye on it,
17:22
Speaker 2: the judge is keeping an eye on it. That part
17:25
Speaker 2: seems manageable. It's really how to get the refunds back
17:29
Speaker 2: to those who may have paid higher prices. That will
17:32
Speaker 2: be a real challenge.
17:33
Speaker 1: And Jim, what's your take on the big picture for trade?
17:37
Speaker 2: The only thing I would say is that trade as
17:40
Speaker 2: a whole remains chaotic. It remains among the top interests
17:45
Speaker 2: of this president and this administration, and it is balanced
17:48
Speaker 2: against the clear importance of affordability as a midterm election
17:54
Speaker 2: year issue and a presidential election issue. So the balance
17:58
Speaker 2: between tariffs and affordable will continue to define this debate
18:03
Speaker 2: this year and running through to the presidential elections.
18:06
Speaker 1: Always a pleasure to have you on, Tim, Thanks so much.
18:09
Speaker 1: That's Timothy bright Bill, co chair of the International Trade
18:13
Speaker 1: Practice at Willie Rhine.
18:20
Speaker 3: Please welcome the very first winner of the FIFA Peace Prize,
18:27
Speaker 3: theifth and forty seven President of the United States of America,
18:31
Speaker 3: Mister Donald J. Trump.
18:34
Speaker 4: Please thank you very much.
18:40
Speaker 3: This is truly one of the great honors of my life.
18:43
Speaker 1: You may remember back in December when FIFA President Gianni
18:47
Speaker 1: Infantino awarded President Donald Trump the newly created FIFA Peace Prize.
18:54
Speaker 1: Days later, the US Solicitor General ordered Brooklyn prosecutors to
18:59
Speaker 1: drop two FIFA bribery convictions. In twenty twenty three, a
19:04
Speaker 1: jury had handed down guilty verdicts against Erman Lopez and
19:09
Speaker 1: the sports marketing group Full play By for money laundering
19:13
Speaker 1: and wirefraud in connection with a scheme to bribe international
19:17
Speaker 1: soccer officials for World Cup broadcasting rights. The highly unusual
19:23
Speaker 1: move of prosecutors asking a judge to overturn guilty verdicts
19:28
Speaker 1: could lead to the reversal of convictions in dozens of
19:32
Speaker 1: other international soccer corruption cases, as well as the return
19:37
Speaker 1: of hundreds of millions of dollars in recovered penalties. So
19:40
Speaker 1: a Brooklyn federal judge is requiring the Justice Department to
19:45
Speaker 1: provide a legal basis for dropping the long running international
19:50
Speaker 1: soccer corruption case and explain the impact on related convictions
19:55
Speaker 1: and penalties. Joining me is Bloomberg Legal reporter Patricia Hurtano,
19:59
Speaker 1: who's been following this legal saga for years. Patty tell
20:04
Speaker 1: us how we got to this point in this long
20:06
Speaker 1: running investigation and prosecution.
20:09
Speaker 5: Two federal juries convicted three sports marketing executives and soccer bosses.
20:17
Speaker 5: They had different titles in a massive bribery scheme for
20:21
Speaker 5: paying bribes or accepting bribes for sports marketing tied to
20:26
Speaker 5: soccer and FIFA International Soccer. It was part of a
20:29
Speaker 5: huge case unveiled by then Attorney General Loretta Lynch in
20:33
Speaker 5: twenty fifteen too much fanfare and people may remember that
20:38
Speaker 5: all the soccer barons were collected in a Barlac five
20:41
Speaker 5: star hotel in Switzerland and the FBI and law enforcement
20:46
Speaker 5: raided it and took them away in handcuffs. There was
20:50
Speaker 5: a huge trial in twenty seventeen and resulted in the
20:55
Speaker 5: conviction of two of those soccer officials, and then they appealed,
21:01
Speaker 5: and then there was a trial in twenty twenty three
21:04
Speaker 5: of former twenty first Century Fox executive and alleged bride
21:10
Speaker 5: paying and receiving and a company called Full Play was
21:13
Speaker 5: also convicted. So then goes the story the appeal of
21:18
Speaker 5: the first two executives.
21:19
Speaker 4: They appealed it and the convictions were upheld.
21:21
Speaker 5: And then we get to the story where the twenty
21:24
Speaker 5: first century Fox executive is named at A. Non Lopez,
21:28
Speaker 5: and he had hired a squad of good lawyers and
21:32
Speaker 5: they challenged and challenged the case, and then out of
21:35
Speaker 5: the blue, the judge dismisses his conviction, anticipating how the
21:42
Speaker 5: Supreme Court would rule. And it took everyone by surprise
21:47
Speaker 5: and the government by surprise, and they challenged it, and
21:50
Speaker 5: they went to the second Circuit and they won. The
21:53
Speaker 5: circuit reinstated the conviction. He continued to challenge it, and
21:58
Speaker 5: he was taken it to the Supreme Court, and then
22:00
Speaker 5: suddenly everyone was very shocked. Literally days before Christmas of
22:06
Speaker 5: last year, the government and the Solicitor General said they
22:11
Speaker 5: weren't going to appeal this case. So basically it put
22:16
Speaker 5: the case back into the posture of a conviction for
22:19
Speaker 5: ernand Lopez and full play will no longer be challenged.
22:23
Speaker 5: Nothing to see here, Supreme Court judges, the government is
22:27
Speaker 5: pulling away from this prosecution. So reporting from my colleague
22:33
Speaker 5: and I in be law determined that the Trump administration
22:37
Speaker 5: ordered the Eastern District to pull the plug on their prosecution.
22:43
Speaker 1: The order you reported from the Solicitor General to pull
22:45
Speaker 1: the prosecution was that after Donald Trump was awarded a
22:50
Speaker 1: so called peace prize by FIFA.
22:53
Speaker 5: Yes, surprisingly you remember that, so, yes, this is true.
22:57
Speaker 5: It happened days later. So my sources told me that
23:02
Speaker 5: the Eastern District did not want to pull the plug.
23:04
Speaker 5: It was one of their And the other thing that
23:06
Speaker 5: affects this whole thing and this equation is that more
23:10
Speaker 5: than two dozen defendants either pleaded guilty or were convicted.
23:16
Speaker 5: So imagine you have at least twenty four people or
23:20
Speaker 5: entities that got convicted in this crackdown of international soccer,
23:25
Speaker 5: and what happens to them too? Because they all are
23:28
Speaker 5: running back to court saying, Hey, if the judge voided
23:31
Speaker 5: that guy's conviction, what about us?
23:33
Speaker 4: What about me? It was an uproar in the court.
23:36
Speaker 1: In January, the Supreme Court vacated and remanded the Second
23:42
Speaker 1: Circuit's decision reinstating the bribery and money laundering convictions of
23:48
Speaker 1: Lopez and the full play group. So where do we
23:51
Speaker 1: stand now?
23:52
Speaker 5: Where we stand now is the case has been abandoned.
23:56
Speaker 5: So what does it mean for not only against a
23:59
Speaker 5: non lope as in Full Play the company that were convicted,
24:02
Speaker 5: the government's abandoning that. But then it threw into question
24:05
Speaker 5: what was the government going to tell the district court
24:08
Speaker 5: judge about the remaining defendants? And so what's happened now
24:11
Speaker 5: is the judge ordered the government to explain what the
24:16
Speaker 5: heck was going on. So the same judge that overturned
24:19
Speaker 5: the conviction of these two defendants, and she had previously
24:22
Speaker 5: upheld the convictions of the other twenty four entities and people,
24:26
Speaker 5: she basically asked the government to explain themselves. So what
24:30
Speaker 5: we saw on filed late Thursday that showed up on
24:33
Speaker 5: the docket on Friday morning is the government's explanation.
24:36
Speaker 1: And what is the government's explanation.
24:38
Speaker 5: The government's explanation is we've decided it's not worth pursuing
24:42
Speaker 5: these two cases. So is it kind of a solemnonic
24:45
Speaker 5: decision if you want to call it because they want
24:47
Speaker 5: to save the bathwater rather than the baby, I guess
24:50
Speaker 5: if you want to call it that way, I mean
24:52
Speaker 5: they're basically agreeing to dismiss these two cases. The Full
24:57
Speaker 5: Play Company conviction as well as Air non Lope. But
25:01
Speaker 5: they say there are different elements involved in the earlier convictions,
25:05
Speaker 5: so they should stay. They said that the Department of
25:08
Speaker 5: Justice has determined it will not commit further resources to
25:11
Speaker 5: these two defendants conviction. They said, in the interests of justice,
25:15
Speaker 5: just get rid of these two cases, but let the
25:18
Speaker 5: other twenty four stand.
25:19
Speaker 4: It's quite remarkable.
25:21
Speaker 1: Absolutely, the federal rules of criminal procedure do allow the
25:24
Speaker 1: government to seek dismissal of an indictment even after there's
25:29
Speaker 1: a conviction by a jury and a court has entered judgment.
25:33
Speaker 1: But how unusual is it for the US attorney to
25:36
Speaker 1: come in and say, well, we got these convictions, your honor,
25:39
Speaker 1: but forget it, we don't really want them.
25:42
Speaker 5: It's unusual too that the government, when they were winning,
25:46
Speaker 5: would pull out. I mean, that was what was so
25:48
Speaker 5: extraordinary about what I saw on the docket in December.
25:51
Speaker 5: I mean, first docket entry was from the US Attorney
25:54
Speaker 5: in Brooklyn telling the court, hey, we're pulling out of
25:58
Speaker 5: this case, and then leave seconds later, minutes later, the
26:02
Speaker 5: Solicitor General of the United States pulls out of the case. Now,
26:06
Speaker 5: my colleague and Bee Law had his sources saying that basically,
26:11
Speaker 5: DOJ felt and the Solicitor General felt the case was
26:14
Speaker 5: not winnable, but they had already won at the circuit,
26:17
Speaker 5: which is kind of incredible.
26:19
Speaker 4: I mean, if you're winning, do you give up?
26:22
Speaker 1: Not usually. I mean, there seems to be a lot
26:25
Speaker 1: more here than we're being told. So the papers are
26:28
Speaker 1: in then or are there more papers to come?
26:31
Speaker 4: Well?
26:32
Speaker 5: I anticipate that what's going to happen is these defendants,
26:36
Speaker 5: some of them led guilty expecting you know, some of
26:40
Speaker 5: them have gone to prison and are out.
26:42
Speaker 4: So we have two defendants.
26:44
Speaker 5: The soccer bosses, Latin American soccer bosses. They got convicted
26:49
Speaker 5: in twenty seventeen and did their time and are out.
26:53
Speaker 5: They're wealthy enough to sort of try to go to
26:55
Speaker 5: see if they can get a clean slate, to wipe
26:57
Speaker 5: away their conviction and ask for something. I mean, I
27:00
Speaker 5: don't think this is the end of it. Obviously, if
27:02
Speaker 5: you have a smart lawyer and you're mad about Hey,
27:05
Speaker 5: I did a deal, but that's not fair to let
27:07
Speaker 5: that other guy get away with it. Why do I
27:10
Speaker 5: have to have that black mark on my record? You know,
27:12
Speaker 5: certainly worth hiring a lawyer and to pursue that, and.
27:15
Speaker 1: So they're like about thirty individuals and corporate defendants who've
27:21
Speaker 1: entered guilty please who may now want to withdraw them.
27:25
Speaker 5: Here's this data I have. Or corporate defendants pled guilty,
27:31
Speaker 5: Two corporate defendants got deferred prosecution agreements, one corporation got
27:35
Speaker 5: a non prosecution agreement, twenty six peopled defendants got convicted,
27:41
Speaker 5: and one basically they dropped the cooperation agreement. I mean,
27:45
Speaker 5: one key former banker. He was a city bank banker,
27:48
Speaker 5: and he became the government's star witness. I mean, the
27:51
Speaker 5: guy cooperated for like eight years in this investigation, and
27:55
Speaker 5: his whole life got eaten up by this case and
27:58
Speaker 5: he pled guilty and he got no JA time, you know.
28:01
Speaker 5: I mean, imagine being that person and you've given up
28:03
Speaker 5: your life and there were death threats allegedly against him,
28:07
Speaker 5: and imagine you were living under this cloud and then
28:09
Speaker 5: the US government says, hey, it's okay, nothing to see.
28:13
Speaker 1: Here are the prosecutions over basically, or there are other
28:16
Speaker 1: cases pending.
28:17
Speaker 5: I mean, there's two defendants who it's a father and
28:21
Speaker 5: son sports marketing company executives that are basically in South
28:26
Speaker 5: America and they're never going to be showing up in
28:29
Speaker 5: the US so they could get arrested. So I mean
28:32
Speaker 5: that case is pending against them, and the government has
28:35
Speaker 5: vowed that they would pursue them, And I mean the
28:37
Speaker 5: way the government has written their letter that they filed
28:39
Speaker 5: on Friday is it's sort of very discrete carving out
28:43
Speaker 5: of the defendants. These two defendants are non Lopez and
28:47
Speaker 5: full Play and not the other twenty six in that hopper.
28:52
Speaker 5: So if you can think about it, those earlier people
28:54
Speaker 5: may be according the way the government's perspective, they're still
28:58
Speaker 5: in their target site. We'll see if some executives got
29:02
Speaker 5: a lot of money and wants to get their lawyer
29:04
Speaker 5: in and make a big deal about this that hey,
29:06
Speaker 5: this ain't fair, you know.
29:08
Speaker 1: And hundreds of millions of dollars in penalties were paid, right.
29:12
Speaker 5: I mean, the government's carving out and say basically, leave
29:15
Speaker 5: those alone. Those are fine, We're still happy with those
29:19
Speaker 5: and we're not going to give up. It's just Ernon
29:21
Speaker 5: Lopez in this full Play group that we're giving up on,
29:25
Speaker 5: which is kind of a wild theory. And it'll be
29:28
Speaker 5: up to the judge who's basically started this to have
29:31
Speaker 5: to parse out.
29:33
Speaker 1: And also the Second Circuit decision was important as far
29:38
Speaker 1: as you know, the government's ability to prosecute these corruption
29:43
Speaker 1: cases right sort of gave the government a leg up.
29:46
Speaker 5: Yeah, and that's one of the arguments that the government
29:48
Speaker 5: did say that when the member, when I said that,
29:51
Speaker 5: the judge ex partey, without any invitation, decided on her
29:55
Speaker 5: own to say, you know what, I just sat through
29:58
Speaker 5: this trial, they got a conviction, and here I am
30:01
Speaker 5: about five six months later, on second thought, I'm going
30:04
Speaker 5: to dismiss it because this is what I think the Supreme.
30:07
Speaker 4: Court would roll.
30:07
Speaker 5: The Circuit was very affirm and said she shouldn't be
30:11
Speaker 5: taking the job of having to determine how the Supreme
30:13
Speaker 5: Court is going to roll on something. She should just
30:16
Speaker 5: have looked at what she was asked for. So the
30:19
Speaker 5: government fought very strenuously in their appeal, saying to the
30:24
Speaker 5: Second Circuit, Hey, this is important for us. We have
30:28
Speaker 5: a new way of attacking international corruption. The judge had
30:32
Speaker 5: ruled that this was international corruption that didn't fit into
30:35
Speaker 5: the actual statutes.
30:38
Speaker 1: The Solicitor General, according to your sources, didn't want to
30:42
Speaker 1: go forward with this because he was afraid that the
30:45
Speaker 1: Supreme Court would reverse because the Supreme Court has been
30:49
Speaker 1: on a sort of a mission to limit corruption cases.
30:54
Speaker 5: Yes, Solicitor General was saying this, but my sources also
31:00
Speaker 5: told me that they were pretty convinced that they were
31:04
Speaker 5: going to win at the Supreme Court and that they
31:07
Speaker 5: were ordered to give up on the case by DOJ
31:10
Speaker 5: and the Trump DOJ just days after mister Trump got
31:14
Speaker 5: the FIFA Peace Prize.
31:17
Speaker 1: And if every time this listener general thought they were
31:19
Speaker 1: going to lose it, the Supreme Court just threw in
31:21
Speaker 1: the towel, that would write pretty unusual, right, And.
31:26
Speaker 5: Also you know, I mean the Second Circuit is hardly
31:30
Speaker 5: they are one of the venues for this grist of
31:34
Speaker 5: white collar corruption, right. I mean they are a very
31:37
Speaker 5: tough circuit and they've made a lot of rulings that
31:41
Speaker 5: have gotten and have been upheld in the Supreme Court
31:44
Speaker 5: so anticipating.
31:46
Speaker 4: I mean, this case so extraordinary.
31:48
Speaker 5: You have a judge who decided on her own without
31:50
Speaker 5: being asked. She was repeatedly asked by the way during
31:54
Speaker 5: the trial by the defense lawyers, hey this is not right,
31:58
Speaker 5: and she rejected it. And then she gets she had
32:01
Speaker 5: the summer to think about it and to decide it
32:02
Speaker 5: on her own you know what, I think this is
32:04
Speaker 5: what the Supreme Court's going to rule. And she was
32:07
Speaker 5: actually like chided by the Second Circuit about this.
32:10
Speaker 1: So what does the timeline look like in the case now?
32:13
Speaker 5: When the Solicitor General and the US Attorney told the
32:18
Speaker 5: judge that they were not going to pursue this case,
32:22
Speaker 5: a couple of weeks later, the district court judge asked
32:26
Speaker 5: for an explanation. So next thing we have to hear
32:29
Speaker 5: is from the defense lawyers, who I'm sure are thrilled
32:32
Speaker 5: and what they're.
32:33
Speaker 4: Going to say.
32:34
Speaker 5: And then I expect more defendants maybe flocking to her
32:40
Speaker 5: and asking her, Hey.
32:42
Speaker 4: What about me? Nobody wants to be left out of
32:45
Speaker 4: a good ruling like this.
32:47
Speaker 1: The two defendants or non Lopez in the sports marketing
32:50
Speaker 1: group full play, I mean, is there anything about them
32:53
Speaker 1: that stands out from the rest of the defendants? Do
32:57
Speaker 1: they have more ties to the Trump administration? I mean,
33:00
Speaker 1: do they stand out for any other reasons?
33:03
Speaker 5: Ernn Lopez has gotten very wealthy and doing a podcast company,
33:07
Speaker 5: and that's got a lot of clout and ate a
33:10
Speaker 5: lot of money after he left twenty first Century Fox.
33:14
Speaker 5: You know, he's got some excellent lawyers, including one who
33:18
Speaker 5: is a former federal judge in Brooklyn. So, whether one
33:21
Speaker 5: has moral suasion or has you know, the creds, the
33:26
Speaker 5: legal creds to help you in your pursuit of what
33:30
Speaker 5: you think was an injustice. I mean, the one thing
33:33
Speaker 5: that all the defendants have assailed is there was no
33:36
Speaker 5: nexus for the US to bring this kind of case.
33:39
Speaker 5: But the government Eastern District especially is very creative and
33:43
Speaker 5: establishing that there were actual impacts on the American legal
33:46
Speaker 5: system or also on the financial system, and they showed
33:50
Speaker 5: thousands of financial transactions where some of them even had
33:54
Speaker 5: bribes that went through US financial institutions who correspondent banks.
33:59
Speaker 5: So I mean the government, yeah, I mean the reach
34:03
Speaker 5: maybe has been self impost you know, think about it,
34:06
Speaker 5: if you put yourself in a straight track of rather
34:08
Speaker 5: than having one put on you. So, I mean, this
34:11
Speaker 5: kind of decision will maybe limit further transnational criminal cases,
34:16
Speaker 5: especially white collar financial fraud cases.
34:19
Speaker 1: We've talked about these cases so many times, and I
34:22
Speaker 1: anticipate we'll be talking about them again. Thanks so much, Patty.
34:27
Speaker 1: That's Bloomberg Legal reporter Patricia Hurtado, And that's it for
34:30
Speaker 1: this edition of the Bloomberg Law Show. Remember you can
34:33
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34:37
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