Latest / Bloomberg Law / Weekend Law: Trump's Revenge, Hwang Sentence & Lawyers in Debt

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Weekend Law: Trump's Revenge, Hwang Sentence & Lawyers in Debt · Bloomberg Law

0:03
Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
0:09
Speaker 1: It's the enemy from within, all the scum that we
0:12
Speaker 1: have to deal with that hate our country.
0:15
Speaker 2: That's a bigger enemy than China and Russia.
0:19
Speaker 3: Donald Trump has long railed against his perceived enemies from
0:23
Speaker 3: within and vowed to get revenge on a long list
0:27
Speaker 3: of prosecutors, political opponents, and private citizens. And there seems
0:31
Speaker 3: to be little doubt that the President elect intends to
0:35
Speaker 3: use the Justice Department to exact his revenge. We will
0:39
Speaker 3: completely overhaul Kamala's corrupt Department of Injustice, and now Trump
0:43
Speaker 3: is putting together a team of loyalists at the Justice
0:47
Speaker 3: Department that would be positioned to carry out his vows
0:50
Speaker 3: of retribution. Joining me is Stephen Gillers, an ethics professor
0:54
Speaker 3: at NYU Law School. Trump has been very open on
0:58
Speaker 3: the campaign trail about getting revenge against those who supposedly
1:02
Speaker 3: wronged him, and reportedly some current and former Justice Department
1:07
Speaker 3: and FBI officials are already contacting lawyers in anticipation of
1:11
Speaker 3: being investigated. I mean, do you think that they need
1:14
Speaker 3: to be worried even if they don't think they did
1:17
Speaker 3: anything wrong.
1:18
Speaker 4: Yeah, They need to be worried because even if they
1:21
Speaker 4: did nothing wrong, and even if they are vindicated in
1:25
Speaker 4: any civil or criminal case that the Justice Department brings
1:29
Speaker 4: against them, the cost of the vindication can be enormous
1:34
Speaker 4: in terms of lawyer fees, anxiety, lost time at their job. So, yeah,
1:41
Speaker 4: they should be worried. They should lawyer up. They should
1:44
Speaker 4: take Trump at his word. They should expect to be
1:47
Speaker 4: a subject of investigation. Remember back in the first Trump administration,
1:53
Speaker 4: there was an IRS investigation of James Comy. Now that's
1:58
Speaker 4: the IRS. It's not the Justice Apartment, but a full
2:02
Speaker 4: IRS Audit is I'm consuming and expensive. It has been
2:07
Speaker 4: described as the legal equivalent of a colonoscopy. It's very
2:12
Speaker 4: disheriting to have to go through that, and Komi had
2:15
Speaker 4: to go through that. As it happened, it turned out
2:18
Speaker 4: that the IRS found that he overpaid his taxes. But nonetheless,
2:23
Speaker 4: the cost of getting to that point for Coombe in
2:27
Speaker 4: money and anxiety would have been enormous. Well, the same
2:30
Speaker 4: thing can happen in civil or criminal investigations by the
2:34
Speaker 4: Justice Department.
2:35
Speaker 3: Also, if you investigate someone long and hard enough, you
2:39
Speaker 3: can find other things in their past that may be
2:42
Speaker 3: illegal but not connected to the investigation. Special Counsel John
2:47
Speaker 3: Durham conducted years and years of investigations and the only
2:51
Speaker 3: guilteply he got was from an FBI lawyer who had
2:54
Speaker 3: lied on some documents, so something not related to the
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Speaker 3: purpose of his investors.
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Speaker 5: Right.
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Speaker 4: You know, a thorough investigation can turn up evidence or
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Speaker 4: a parent evidence of wrongdoing civil or criminals that wasn't
3:10
Speaker 4: on your radar screen when you started the investigation. When
3:14
Speaker 4: you turn over every document, when you look at every email,
3:18
Speaker 4: you could find things that arguably indicate some basis for
3:23
Speaker 4: a lawsuit or an indictment that you didn't know about
3:26
Speaker 4: at the beginning. But again, you know, if someone is
3:29
Speaker 4: charged with a crime in fact or too civilly, ultimately
3:34
Speaker 4: there's a trial. If there's no settlement, the government can
3:38
Speaker 4: cause a lot of pain without ever having to prove
3:42
Speaker 4: the case a trial. Just by conducting the investigation. It
3:47
Speaker 4: can bring a case to trial and drop the case.
3:50
Speaker 4: So vindication is not a victory for the target of
3:55
Speaker 4: the government. Hostility and conviction or a money judge is
4:00
Speaker 4: not necessarily the goal of a justice department that is
4:05
Speaker 4: out for revenge. The cost in money, time and anxiety
4:11
Speaker 4: alone can be extremely punishing.
4:15
Speaker 3: I think we're all aware of one of the people
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Speaker 3: at the top of Trump's.
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Speaker 4: Enemies list, Jack Smith, should be considered mentally deranged. He
4:24
Speaker 4: should be thrown out of the country.
4:26
Speaker 3: Special counsel Jack Smith brought the two federal prosecutions against Trump.
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Speaker 3: What kind of investigation or prosecution can we expect of Smith?
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Speaker 4: Well? Smith is an interesting situation, and from Trump's point
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Speaker 4: of view, judging from what he has said, Smith is
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Speaker 4: trump Enemy number one. He must be in the President's
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Speaker 4: site as the dominant person to terrorize with legal remedies
4:54
Speaker 4: and legal threats. Now, anything Jack Smith did to antagonize
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Speaker 4: the president as Trump's he would have done as an
5:01
Speaker 4: employee the Justice Department. Jack Smith is in a somewhat
5:04
Speaker 4: different position than other potential alleged enemies. He would have
5:08
Speaker 4: to be defended by the government. That is, a Justice
5:12
Speaker 4: Department lawyer who is accused of wrongdoing after leading government
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Speaker 4: is entitled to a government defend There are some exceptions,
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Speaker 4: but if the wrongdoing or the alleged wrongdoing is within
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Speaker 4: the scope of the lawyer's job, the government will defend him.
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Speaker 4: Now Here, that's not possible because it will be the
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Speaker 4: government itself that is targeting Jack Smith. So the Justice
5:36
Speaker 4: Department can't be both the prosecutor and the defense lawyer,
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Speaker 4: and so Jack Smith will have to be provided with
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Speaker 4: the cost of a highly skilled defense law firm to
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Speaker 4: respond to any DOJ effort to investigate or prosecute him.
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Speaker 4: That may be good for Jack Smith in the sense
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Speaker 4: that he doesn't have to pay out of his own powers,
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Speaker 4: although even there I imagine that DOJ might argue that
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Speaker 4: Smith is not entitled to the court of a defense
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Speaker 4: for some reason that justice comes up with, and then
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Speaker 4: that question has to be litigated, and Smith will need
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Speaker 4: a lawyer to represent him on the question of whether
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Speaker 4: or not the government has to defend him or pay
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Speaker 4: for his defense when the charge comes from the government itself.
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Speaker 3: So litigation before the litigation the local failed district attorney
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Speaker 3: charging a former president of the United States for the
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Speaker 3: first time in history. What about Manhattan District Attorney Alvin Bragg,
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Speaker 3: who brought the hush money case, the only case against
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Speaker 3: Trump to actually go to trial. Trump has excoriated him,
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Speaker 3: and also New York Attorney General Letitia James, who won
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Speaker 3: that four hundred and fifty million dollar verdict against Trump.
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Speaker 4: Well, Bragg and James are also in the Trump target range.
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Speaker 4: Both of them will get a defense from New York State,
7:00
Speaker 4: so neither of them would expect to have to pay
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Speaker 4: out of their own profit for the court of a defense. Indeed,
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Speaker 4: the state might defend them through a state agency, or
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Speaker 4: it might pay for private counsel. So that's beneficial for them.
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Speaker 4: They don't have to bankrupt themselves defending themselves. But again,
7:20
Speaker 4: the anxiety and the time commitment of fighting the government
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Speaker 4: can be extremely painful.
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Speaker 3: I'm trying to think of what kind of prosecution the
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Speaker 3: Justice Department could bring against either one of them. I mean,
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Speaker 3: Trump has said over and over again that they brought
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Speaker 3: these cases for political reasons. That claim failed before the
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Speaker 3: trial judges. I mean, is any of that actionable.
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Speaker 4: There is no doubt that Trump lawyers see the public
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Speaker 4: or Project, would be able to articulate a remotely plausible
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Speaker 4: theory for targeting James or Bratt that will fail in court.
8:01
Speaker 4: But all you need to do to get revenge is
8:03
Speaker 4: to conduct the investigation. Now, it is unlikely that the
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Speaker 4: Justice Department will ever represent Trump against Bragg or James.
8:13
Speaker 4: Trump would have to get private counsel to bring those cases.
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Speaker 4: I don't see how the investigations by Bragg and James
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Speaker 4: can be turned into a DOJ case as opposed to
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Speaker 4: a private case brought by Trump himself. He may do that.
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Speaker 4: Another option for Trump if he wants to get even
8:34
Speaker 4: with Bragg and James, he doesn't have to pursue his
8:38
Speaker 4: own claims. He can just call up any of the
8:41
Speaker 4: relevant regulatory agencies. Of course, the IRS is the most obvious,
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Speaker 4: but truly not the only to look into their behavior
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Speaker 4: in going after him, and that could be enough to
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Speaker 4: cause them a great deal of anguish even if nothing
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Speaker 4: comes of it.
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Speaker 3: I assume out the window is the idea of the
9:01
Speaker 3: Justice Department being nonpartisan and being independent of the White House.
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Speaker 4: Yeah, you know at Bonham. The problem here is that
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Speaker 4: the Supreme Court has told us that the President controls
9:15
Speaker 4: all power of the executive branch, all of it. That's
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Speaker 4: a direct quote, all of it, And so Trump can
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Speaker 4: control the agenda for DOJ. There's no check in balance
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Speaker 4: within the executive branch. Trump is the decider all by
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Speaker 4: himself about what the executive branch will will not do
9:35
Speaker 4: in the way of exercise of executive power. So the
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Speaker 4: tradition of norms by which the Justice Department operates independently
9:44
Speaker 4: of the president. That tradition is not legally mandated, and
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Speaker 4: Trump did change it through the Attorney General taking control
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Speaker 4: of the decisions of the Justice Department that are of
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Speaker 4: particular interest to him. By an effect, taking control of
10:02
Speaker 4: the decisions of the Justice Department that are of particular
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Speaker 4: interest to him, ninety nine point ninety nine percent of
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Speaker 4: what DOJ does will be of no interest to Trump
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Speaker 4: at all, But a sliver of matters will be of
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Speaker 4: great interest to him because they benefit him or friends
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Speaker 4: of his, or because they target his enemies. And where
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Speaker 4: those matters arise or could arise, Trump is the decider.
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Speaker 4: And so what we've done is flip the switch so
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Speaker 4: that at one time the Attorney General was the decider
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Speaker 4: and the executive the White House stayed away from those decisions. Now,
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Speaker 4: for a very small but important sliver of DOJ decisions,
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Speaker 4: the White House will be the decider. And there's nothing
10:50
Speaker 4: that DOJ lawyers can do to resist that, and the
10:54
Speaker 4: ones that Trump has chosen may not wish to resist that.
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Speaker 3: Trump is going to nominate for or Florida Attorney General
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Speaker 3: Pam Bondy to be the US Attorney General. She's a
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Speaker 3: fierce defender of his and has repeated Trump's claims that
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Speaker 3: DOJ's investigations of him were political. He's giving the two
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Speaker 3: lawyers who defended him at the hush money trial top
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Speaker 3: positions at DOJ and naming the lawyer who represented him
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Speaker 3: at the Supreme Court as the US Solicitor General. Does
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Speaker 3: this raise any alarms? Arms? Or is it concerning?
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Speaker 4: Yeah, it is concerning because you want people running Justice
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Speaker 4: Department who have no pensive loyalty to the president other
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Speaker 4: than the loyalty of following the law. But there's a
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Speaker 4: personal relationship there. You know, this goes way back to
11:39
Speaker 4: President Kennedy chose his brother to be attorney General, and
11:42
Speaker 4: there was a lot of criticism that selection. Well, there's
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Speaker 4: an analogy here. The relationship between Trump and his former
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Speaker 4: defense lawyers could be seen to give rise to a
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Speaker 4: sense of loyalty to Trump that will undermine the need
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Speaker 4: for distance and independence on the part of the people
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Speaker 4: who run Justice.
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Speaker 3: Is there a president in the past who used the
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Speaker 3: Justice Department in the way that Trump seems to want to.
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Speaker 4: Well, there are some reason to believe that Nixon did
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Speaker 4: had his enemies list and did use the department that way.
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Speaker 4: There has never been the kind of overt threat of
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Speaker 4: retaliation against enemies that Trump has prominently anticipated, even during
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Speaker 4: the Nixon years when John Mitchell was Attorney General. We
12:33
Speaker 4: don't have the same degree of evidence of intent in
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Speaker 4: the Nixon Mitchell years that we have exclicitly in Trump's threats.
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Speaker 3: Thanks so much for being on the show. That's Professor
12:45
Speaker 3: Stephen Gillers of NYU Law School. I'm June Grosso. When
12:49
Speaker 3: you're listening to Bloomberg. On Wednesday, Arkago's founder Bill Huong
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Speaker 3: was sentenced to eighteen years in prison for securities fraud
12:58
Speaker 3: and market manipulation. On Thursday, in a startling twist, the
13:02
Speaker 3: defense attorney convinced the judge to consider reducing that sentence.
13:07
Speaker 3: A jury convicted Wang in July of ten charges for
13:11
Speaker 3: orchestrating a scheme to mislead Banks into providing Archagos with
13:16
Speaker 3: billions of dollars in trading capacity, inflating the value of
13:19
Speaker 3: his portfolio until the bubble burst in March of twenty
13:23
Speaker 3: twenty one, costing banks more than nine billion dollars. At
13:27
Speaker 3: Wednesday's sentencing, judge Alvin Hellerstein didn't seem particularly open to
13:32
Speaker 3: the arguments by the defense, even musing at one point
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Speaker 3: that Huang was a god fearing man who cheats fellow men.
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Speaker 3: The judge sentenced him to eighteen years in prison, very
13:44
Speaker 3: close to the twenty one years the government had asked for.
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Speaker 3: But it seems things can change radically overnight. Joining me
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Speaker 3: is Bloomberg Legal reporter Chrystal Mesh, who's been in the
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Speaker 3: courtroom for all the twists and turns. Chris, this sentencing
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Speaker 3: was unusual from the start, a two day sentencing hearing,
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Speaker 3: and it's.
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Speaker 1: Not over yet, so unusual, bizarre, however you want to
14:06
Speaker 1: put it, is probably a good descriptor. So the judge
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Speaker 1: had extended the sentencing hearing for a day to address
14:12
Speaker 1: some other issues such as restitution and forfeiture and bail
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Speaker 1: pending appeal. And you know, that's very unusual in itself,
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Speaker 1: because most sentencings take just a couple of hours. But
14:20
Speaker 1: then when they came in on Thursday, Married Burke, the
14:23
Speaker 1: lawyer for mister Wong, got up and said he had
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Speaker 1: kind of tossed and turned all night and was, you know,
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Speaker 1: just really wondering if they should have done more, and
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Speaker 1: at that point he proposed changing the sentence, essentially not
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Speaker 1: giving him less than eighteen years in custody, but having
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Speaker 1: the first eleven and a half years be in prison
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Speaker 1: in the second six point five years being home confinement.
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Speaker 1: And the reason he did that is because there's Bureau
14:50
Speaker 1: Prison Justice Department rules that when you have more than
14:54
Speaker 1: eleven and a half years incarceration, you can't be in
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Speaker 1: a minimum security prison, which he said, you know, would
15:00
Speaker 1: prevent his Stanley from visiting. He's sixty years old. He
15:03
Speaker 1: has heart issues that may require open heart surgery. He
15:06
Speaker 1: was saying, you know, this is the kind of thing
15:07
Speaker 1: that happened during COVID, and it sounds like the judge
15:10
Speaker 1: is considering that. He said he thinks he's allowed to
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Speaker 1: do it. He's not saying he will. The government argued
15:14
Speaker 1: against it, saying they think that would kind of take
15:17
Speaker 1: the boomp out of the sentence that you know, they
15:19
Speaker 1: wanted to send a message to others who would commit
15:21
Speaker 1: similar crimes when they kind of noticed that a lot
15:23
Speaker 1: of his crimes were during COVID, so a lot of
15:26
Speaker 1: it was just done sitting around the table in an apartment.
15:29
Speaker 1: So that's what they're kind of known, a, hey, you know,
15:31
Speaker 1: he's going to be on home confinement, like that's not
15:33
Speaker 1: exactly going to stop him from, you know, committing further crimes.
15:36
Speaker 1: So the judge did not decide, but it's going to
15:39
Speaker 1: take posts briefing from the two sides by December fifth,
15:44
Speaker 1: and then we'll hold a hearing on December eighteenth, presumably
15:47
Speaker 1: to dress the forfeiture in a possible fine, but that
15:50
Speaker 1: could also be hearing on whether the sentence is changed
15:53
Speaker 1: at all.
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Speaker 3: I imagine that Bill Wong didn't sleep well either. So
15:57
Speaker 3: besides tossing and turning, did the defense attorney have any
16:01
Speaker 3: new arguments for a lower sentence, I mean different from
16:05
Speaker 3: the ones that they articulated on Wednesday, Not really.
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Speaker 1: I mean they rested on their arguments, but they were
16:12
Speaker 1: emphasizing that they don't want to change the sentence. They
16:15
Speaker 1: just think that you know, being in prison for that much,
16:18
Speaker 1: it's also a much more restrictive facility if he would
16:21
Speaker 1: be in anything above minimum security, so that you know,
16:24
Speaker 1: it would be difficult for his family to visit, be
16:26
Speaker 1: difficult for him to get medical care, that sort of thing.
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Speaker 1: So they didn't really expand on their arguments today was
16:32
Speaker 1: more about his health, the fact that he wouldn't be
16:34
Speaker 1: able to see his family, that sort of thing. The
16:36
Speaker 1: really interesting part to me is that, you know the
16:39
Speaker 1: fact that the judge extended the hearing for a second
16:42
Speaker 1: day essentially gave the defense a window to make this argument.
16:48
Speaker 1: Given this judge's age, they came back fresh and you know,
16:51
Speaker 1: gave these defenses an opportunity to make this argument a
16:54
Speaker 1: little more clearly. And when the judge, you know, was
16:56
Speaker 1: fully engaged in listening to what they had to say.
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Speaker 3: He is not years old. It's amazing that he's still
17:02
Speaker 3: presiding over trials like this, complicated trials like this. So yeah,
17:07
Speaker 3: sure is the judge asked Wong's attorneys to submit information
17:11
Speaker 3: on his health status to him privately, But what is
17:16
Speaker 3: he looking for in the papers he's asking both sides.
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Speaker 1: To submit, especially, he just wants more arguments on this,
17:22
Speaker 1: and I think he's really trying to flesh out more
17:25
Speaker 1: of the government's arguments against this and whether he's legally
17:28
Speaker 1: allowed to do it. I think that's what he really
17:30
Speaker 1: wants to know. He wants case law and to know
17:32
Speaker 1: if the law allows him to reduce a sentence. He's
17:34
Speaker 1: already given. Another kind of procedural wrinkle to this is that,
17:38
Speaker 1: you know, at the end of every sentencing hearing, when
17:40
Speaker 1: someone gets sentenced, the judge usually signals what he's going
17:43
Speaker 1: to give. He asks the parties, as there are reason
17:46
Speaker 1: I shouldn't impose this sentence, you know, usually they say no,
17:49
Speaker 1: and then he officially imposes sentience. He asked the dependence
17:53
Speaker 1: to stand up, and he says, you're sentenced to this,
17:55
Speaker 1: you know, the custody of the Bureau of Prisons for
17:57
Speaker 1: X number of years. He didn't do that. Barry Burke
18:00
Speaker 1: voed that, you know, at the beginning of his kind
18:02
Speaker 1: of arguments, and that might have been, you know, some
18:04
Speaker 1: sort of signal to him that he could have made
18:07
Speaker 1: this argument. So the sentence has actually not been officially
18:10
Speaker 1: imposed at this time.
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Speaker 3: I'm sensing a legal loophole ahead here, and that all
18:15
Speaker 3: goes to what we've been talking about, which is how
18:19
Speaker 3: bizarre the sentencing was, or at least the structure of it.
18:23
Speaker 4: I'll just add this.
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Speaker 1: Usually it folly for a defense attorney to attempt to
18:28
Speaker 1: get up to a federal judge and essentially re argue
18:32
Speaker 1: their case after the judges imposed sent or reargue their
18:36
Speaker 1: sentencing recommendation. And you know, with another judge, I don't
18:40
Speaker 1: know if the defense attorney would have done this, because
18:43
Speaker 1: they already kind of irked him with their request for
18:46
Speaker 1: no jail time. And you know, if it had been
18:48
Speaker 1: another judge, they may have been hesitant to do that.
18:51
Speaker 1: But he's made it clear throughout the trial that you
18:53
Speaker 1: know that he's willing to change his mind.
18:55
Speaker 3: Chris, tell us more about his style, where he interrupt
19:00
Speaker 3: the parties a lot, you know, interjects himself into the
19:04
Speaker 3: proceedings more than most federal judges do.
19:08
Speaker 1: Right, judges will spitball all the time during trials, and
19:12
Speaker 1: you know, ask questions of counsel, but they generally prefer
19:15
Speaker 1: to allow the proceedings to happen without their interference. And
19:19
Speaker 1: this judge was not doing that. He was constantly engaging
19:22
Speaker 1: with the lawyers, who was constantly telling them to move
19:24
Speaker 1: on or ask a different question, sometimes just asking their
19:28
Speaker 1: questions for them. So any attempt to like make another
19:32
Speaker 1: argument to most judges is met with scorn. And you
19:36
Speaker 1: know it's because they make it clear what they're thinking
19:39
Speaker 1: is ahead of any kind of decision, even if they
19:41
Speaker 1: don't tell you what the decision is going to be.
19:43
Speaker 1: They hint at it, and Hellerstein regularly would reconsider things
19:48
Speaker 1: in the middle of the case, and you know, if
19:50
Speaker 1: he heard a better argument from either side, he would
19:52
Speaker 1: change his mind. And you just don't always see that
19:55
Speaker 1: with federal judges. They tend to believe in their convictions
19:59
Speaker 1: and they stay and on their rulings and they don't
20:01
Speaker 1: really reconsider them unless they're significant new evidence, right, they don't.
20:05
Speaker 3: Want to hear the same arguments over and over again.
20:08
Speaker 3: So I've been trying and failing to come up with
20:11
Speaker 3: a sentencing similar to this, where a federal judge considers
20:16
Speaker 3: resentencing the day after the sentence. Of course, as you said,
20:20
Speaker 3: perhaps technically the sentence wasn't imposed. I mean, this isn't
20:24
Speaker 3: like a typical motion to reconsider a sentence.
20:27
Speaker 1: Yeah, no, that's very true. And you know that's a
20:29
Speaker 1: good point given that, like I said, many of these
20:33
Speaker 1: things are done in a matter of hours. They're not
20:36
Speaker 1: done over two days. And judges are pretty quick to
20:40
Speaker 1: adjourn a sentencing hearing if they feel they need more
20:43
Speaker 1: briefing or there are issues they need to resolve before
20:46
Speaker 1: they impose sentence. They want that to be the final
20:49
Speaker 1: say kind of. It just never really happens like this.
20:52
Speaker 1: I have seen a case where the judge this is
20:56
Speaker 1: in Connecticut in a white collar case involving a bond trade,
21:00
Speaker 1: or where the judge did not officially impose sentenced that
21:04
Speaker 1: day and postponed hearing for more briefing on I don't
21:07
Speaker 1: remember when it was restitution, but it was another issue,
21:09
Speaker 1: and then he opposed since the next time. But that
21:11
Speaker 1: was a probationary case. So it's not really the same
21:14
Speaker 1: kind of scenario.
21:16
Speaker 3: And did the prosecutor try to revoke his bail.
21:20
Speaker 1: No, the government did not oppose having himself surrender, meaning
21:24
Speaker 1: you know, he would just report to prison whenever the
21:26
Speaker 1: judge told him to. But they did oppose the bail
21:29
Speaker 1: pending appeal, saying that you know, this is a significant
21:31
Speaker 1: term of imprisonment and he should serve it soon.
21:35
Speaker 3: Since the judge granted him bail pending appeal, Wong will
21:39
Speaker 3: be out through the entire reppellate process, which could take years.
21:43
Speaker 1: Yes, unless, of course, the judge decides to reconsider institution,
21:47
Speaker 1: and that's not.
21:48
Speaker 3: Out of the realm of possibility in this case. Still
21:51
Speaker 3: undecided are the questions of forfeiture and restitution, and they
21:55
Speaker 3: weren't discussed at this latest hearing, right.
21:59
Speaker 1: Not really, However, I will say that there were some
22:02
Speaker 1: interesting exchanges about his assets, and the judge noting that
22:07
Speaker 1: really wondering out loud, you know, whether his assets need
22:11
Speaker 1: to be secured in case of, you know, a final
22:14
Speaker 1: judgment against him that would be combined with a monetary
22:17
Speaker 1: penalty or restitution or forfeiture, whatever have you, because he
22:21
Speaker 1: says he only had fifty five million dollars and some
22:23
Speaker 1: of his assets are jointly owned. So the judge wondered
22:26
Speaker 1: whether personal loans should be called back, real estate should
22:29
Speaker 1: be liquidated, whether his residences should be a quote unquote
22:31
Speaker 1: more modest one, whether artworks should be liquidated. But he
22:35
Speaker 1: also noted that any kind of forfeiture, you know, would
22:38
Speaker 1: have to come after restitution, noting that the most important
22:41
Speaker 1: thing is that the victims get paid back first.
22:43
Speaker 3: So are those issues going to be discussed at the
22:46
Speaker 3: next hearing in December.
22:48
Speaker 1: A restitution is deferred, it doesn't sound like that's going
22:51
Speaker 1: to be immediately addressed. Forfeiture could be, It's hard to say.
22:55
Speaker 1: It was not entirely clear exactly what they will be
22:58
Speaker 1: putting in those filings, but I think they will probably
23:00
Speaker 1: cover the gamut.
23:01
Speaker 3: Wong is going to appeal the verdict. Might one of
23:05
Speaker 3: the grounds for appeal be the judge refusing to allow
23:09
Speaker 3: the defense to argue that the banks were sophisticated financial
23:13
Speaker 3: players who took their own risks.
23:16
Speaker 6: Basically, that's part of is limiting them from a blame
23:18
Speaker 6: the bank's strategy. They weren't going to let them argue
23:22
Speaker 6: in the least bit that the banks were to blame
23:25
Speaker 6: for whatever happened because they gave him too much credit
23:29
Speaker 6: or you know, allowed him to do these trades without
23:31
Speaker 6: due diligence. That was kind of the thrust of their
23:34
Speaker 6: main argument before it was limited by the judge. It
23:37
Speaker 6: was kind of you could see this coming even before
23:39
Speaker 6: the trial, because this was the subject of numerous discussions
23:43
Speaker 6: before trial and was clearly going to be laid as
23:45
Speaker 6: a pass for the appeal.
23:47
Speaker 2: That's certainly one of the issues that they're going to raise,
23:49
Speaker 2: you know, they certainly raised it in some of their
23:51
Speaker 2: post trial briefings. In their applications for bail pending appeal,
23:55
Speaker 2: they call out some of the expert testimony for the
23:59
Speaker 2: prosecution's experts when she calculated that some of the trading
24:02
Speaker 2: losses were directly attributable to long conduct or misrepresentation, and
24:07
Speaker 2: they say that that can't be proved, so that might
24:10
Speaker 2: be one of the main things for appeal.
24:12
Speaker 3: A lot more to come in this case. Thanks so much, Chris.
24:16
Speaker 3: That's Bloomberg Legal reporter Chrystal Mesh coming up next. Why
24:20
Speaker 3: mass tort lawyers are trapped in a cycle of debt.
24:24
Speaker 3: I'm June Grosso and you're listening to Bloomberg.
24:26
Speaker 1: Attention veterans who use combat arms of your plugs. Attention,
24:29
Speaker 1: cancer victims who use the weed killer round up.
24:32
Speaker 3: Attention women, Attention landscapers and anyone working in the landscape industry.
24:36
Speaker 3: If you watch TV, then you've seen all the commercials
24:39
Speaker 3: from law firms looking to sign up plaintiffs who have
24:43
Speaker 3: claims in various mass tortue cases. You and your family
24:46
Speaker 3: may be entitled to substantial compensation for compensation for compensation,
24:51
Speaker 3: and the compensation for the lawyers can also be substantial.
24:55
Speaker 3: Think about a hefty percentage of payouts that can be
24:58
Speaker 3: in the billions. But mass tort lawyers are facing a
25:02
Speaker 3: double dilemma these days. The payouts on some of the
25:05
Speaker 3: huge cases are taking longer than expected, years longer, and
25:10
Speaker 3: they can't seem to find the next big tort. That
25:14
Speaker 3: means the high interest loans law firms take out to
25:17
Speaker 3: fund their cases are coming due, forcing them to restructure
25:21
Speaker 3: the loans with pricey concessions to lenders, or to refinance
25:26
Speaker 3: with a new lender joining me is Bloomberg Law Senior
25:29
Speaker 3: reporter Emily Siegel who's written about this so Emily. Mass
25:33
Speaker 3: tort lawyers work on a contingency basis, meaning they get
25:37
Speaker 3: a certain percentage of the payout if the case is
25:40
Speaker 3: won or settled, but nothing if it's lost. Explain how
25:44
Speaker 3: they fund these huge cases that go on for years
25:48
Speaker 3: and years.
25:49
Speaker 5: Sometimes mass tort firms will have their own money that
25:52
Speaker 5: they can put towards cases, But as these cases take
25:55
Speaker 5: longer and longer, litigation funders have come in and sort
25:58
Speaker 5: of like filled this gap for them. So while they
26:01
Speaker 5: wait and they pay all the fees to litigate these cases,
26:05
Speaker 5: they can get funding from a litigation funder, and that
26:08
Speaker 5: has been an increasingly more popular alternative in the mass
26:12
Speaker 5: tort and like plintiffs law space.
26:15
Speaker 3: I saw that litigation financing is a fifteen point two
26:19
Speaker 3: billion dollar industry now. So these are loans with a
26:22
Speaker 3: fixed interest rate that typically mature after three or four years.
26:27
Speaker 3: Rather than being like investments that depend on the outcome
26:31
Speaker 3: of the case, they're.
26:32
Speaker 5: Not based on the outcome in the traditional sense of
26:35
Speaker 5: litigation funding. But they do evaluate the case docket before
26:40
Speaker 5: they fund them, so that's how the pricing is based.
26:42
Speaker 5: So they'll look at a law firms like list of cases,
26:46
Speaker 5: go through them, see what stages they're in. And you know,
26:50
Speaker 5: some of these mass tort firms have thousands of cases,
26:52
Speaker 5: so they may not be looking at every single one,
26:55
Speaker 5: but they do want to get a sense of them
26:57
Speaker 5: and how far along they are and what tortus the
27:00
Speaker 5: involved in and how diverse it is, and that is
27:02
Speaker 5: how they determine the total amount of the loan. So
27:06
Speaker 5: it does still relate to the actual lawsuits that they're funding.
27:10
Speaker 3: And the interest rates are high double digits sometimes.
27:14
Speaker 5: Yeah, I think because these are high risks, they're often
27:17
Speaker 5: double digit interest rates, you know, in the teens and twenties.
27:20
Speaker 5: As the years go on, the interest rates can go up.
27:23
Speaker 3: Two of the largest multi district court cases are against
27:26
Speaker 3: Jay and Jay and Bayer, and they're hitting the ten
27:28
Speaker 3: year mark with no resolution in sight. Tell us a
27:31
Speaker 3: little about those cases, sure well.
27:33
Speaker 5: Johnson and Johnson is one of the ones that we
27:36
Speaker 5: often hear about. They've filed for bankruptcy three times now
27:40
Speaker 5: to try to resolve these cases. It's just been dragging along.
27:44
Speaker 5: The allegations are their calcum powder caused cancer and its users,
27:49
Speaker 5: so that is the gist of the case, and it
27:51
Speaker 5: has been going on for ten years. They just filed
27:53
Speaker 5: for bankruptcy again, I think earlier this year, and they
27:57
Speaker 5: have proposed global settlements that haven't been approved yet. So
28:02
Speaker 5: there's a lot of disagreement amongst even the attorneys about
28:05
Speaker 5: whether they should approve the bankruptcy proceedings. It's just become
28:09
Speaker 5: a totally different type of tort because of that. So
28:13
Speaker 5: they're really tied up in the bankruptcy proceedings and the
28:16
Speaker 5: infighting amongst the lawyers. It's just been delayed and there's
28:20
Speaker 5: not really a clear timeline on when it's going to
28:23
Speaker 5: be resolved. So that's one of the main ones. And
28:25
Speaker 5: then another one that has its sort of a different
28:27
Speaker 5: set of issues is against there for its roundup products
28:31
Speaker 5: and also causing cancer, and that one that there has
28:35
Speaker 5: been three circuits that have had differing opinions on it,
28:38
Speaker 5: which is called the circuit split. So two are in
28:40
Speaker 5: one direction and one is in the other. So because
28:43
Speaker 5: of that, there can be some delays in dispersing settlements
28:47
Speaker 5: and it could be something that the Supreme Court has
28:49
Speaker 5: to rule on.
28:51
Speaker 3: A Supreme Court appeal can certainly take years. Brendan Bear,
28:55
Speaker 3: the founder of Contingency Capital, said, there's a degree of
28:59
Speaker 3: stress and distress in the space. Tell us what he
29:02
Speaker 3: meant by that.
29:04
Speaker 5: There are two things going on, and I think they're related.
29:07
Speaker 5: One is that a lot of these law firms are
29:10
Speaker 5: set up in these loans that are reaching maturity dates
29:14
Speaker 5: and there is not a payout yet on the cases
29:17
Speaker 5: that they were expecting to be paid on. So then
29:19
Speaker 5: they refinance their loans either with the same thunder or
29:22
Speaker 5: a different funder, and they have to take concessions when
29:25
Speaker 5: they do that. So that sort of creates this environment
29:29
Speaker 5: of constant refinancing from investors, and the money is not
29:33
Speaker 5: necessarily coming from the cases, it's coming from other investors
29:36
Speaker 5: in the space. And on top of that, there's not
29:40
Speaker 5: another talcum powder right now. There's not another roundup, there's
29:44
Speaker 5: not another camp lagoon. There are lots of mass torts
29:47
Speaker 5: that are going on, but there's not this like gigantic
29:50
Speaker 5: one that they're all looking towards or that's farther along.
29:53
Speaker 5: So there are two things going on, and that the
29:55
Speaker 5: firms are refinancing rates more often than they expected to be.
29:59
Speaker 5: And also so there's not this big tort that everyone
30:03
Speaker 5: is putting their money towards, or at least you know,
30:06
Speaker 5: a lot of these law firms are really excited about
30:09
Speaker 5: and think, you know, couldn't be helpful to their clients
30:11
Speaker 5: but also result in a big payout.
30:14
Speaker 3: I found that fascinating that as they're litigating these cases,
30:18
Speaker 3: they're looking for the next big tort that they can
30:21
Speaker 3: go after.
30:23
Speaker 5: Yes, I mean they always are, I think to some extent.
30:26
Speaker 5: And there was one I believe it was last year
30:30
Speaker 5: that was against thail and all a legend that thailand
30:33
Speaker 5: All when taken by a pregnant person would cause autism
30:37
Speaker 5: and ADHD, and it ended up going to a Dowberd hearing,
30:40
Speaker 5: which you know, would test the science of the claims
30:44
Speaker 5: and it failed. So that was one that I think
30:47
Speaker 5: some had thought could be the next big one because
30:50
Speaker 5: a lot of women take til and all when pregnant.
30:52
Speaker 5: It's approved, and it could have been a really massive
30:55
Speaker 5: group of people. But then since it failed, it did
30:58
Speaker 5: not become a multi district letigation, and that was something
31:03
Speaker 5: not everyone. I think there were some skepticism around it,
31:05
Speaker 5: but they were intrigued by that one, and so there
31:08
Speaker 5: isn't something like that. I mean, one of the ones
31:11
Speaker 5: that's referenced in the piece is Deco Crivera, which is
31:14
Speaker 5: a contraceptive injection, and that is one that they think
31:18
Speaker 5: will be like a big tort because there are a
31:20
Speaker 5: lot of injuries. But you know, I haven't heard of
31:22
Speaker 5: others at this point.
31:23
Speaker 3: Yeah, one of the financers told you that there might
31:25
Speaker 3: be seven major mass torts at the moment, and once
31:30
Speaker 3: those are settled or litigated, there could be three to
31:33
Speaker 3: five years with no actions. And some of the experienced
31:37
Speaker 3: mass tort lawyers are blaming the new players and firms
31:40
Speaker 3: in the space, saying they're borrowing a lot of capital
31:44
Speaker 3: and fueling the heavily leveraged environment. One told you the
31:48
Speaker 3: market has blown up exponentially, so they're blaming the new guys.
31:52
Speaker 5: I think so, I think that some of the mass
31:54
Speaker 5: tort or some of the plaintiffs. Attorneys believe that there
31:57
Speaker 5: are other law firms that are during the space because
32:00
Speaker 5: they want to get rich and they want to build
32:03
Speaker 5: up their case book, and the way they want to
32:05
Speaker 5: do that is through litigation funding. So they get all
32:07
Speaker 5: these cases, they use the money to market and put
32:11
Speaker 5: out commercials, They retain a lot of different claimants, and
32:15
Speaker 5: then they have to work up those cases and they're
32:18
Speaker 5: not really at least this is what those attorneys are saying.
32:21
Speaker 5: They're not really prepared for the work that goes into
32:24
Speaker 5: working up each individual case. So if you're a law
32:27
Speaker 5: firm of two people and you have thousands of cases
32:30
Speaker 5: because of your litigation funding, how do you attend to
32:33
Speaker 5: all of those clients. So that's what they are saying
32:36
Speaker 5: that there's just a lot of new firms, not necessarily
32:39
Speaker 5: new lawyers, but new to the space coming in and
32:42
Speaker 5: wanting to be part of this, and it's creating an
32:45
Speaker 5: environment where there's a lot of lending going on and
32:47
Speaker 5: also making it more crowded.
32:49
Speaker 3: So it's a difficult area of litigation. It takes a
32:52
Speaker 3: lot of money, it takes a lot of time. But
32:56
Speaker 3: if you win, are the rewards for lawyers, which is
33:00
Speaker 3: astronomical it can be.
33:02
Speaker 5: I think it depends on the quality of the cases
33:05
Speaker 5: that you have, quality meaning the injuries within like the
33:09
Speaker 5: defined realm for the MDL, you know, and if you
33:12
Speaker 5: have a lot of cases like that, you know a
33:15
Speaker 5: lot of these mass towards lawyers are quite wealthy. So yes,
33:18
Speaker 5: but it's also not easy defined good cases and to
33:23
Speaker 5: work them up. So I think there's that sort of
33:25
Speaker 5: tension going on right now.
33:26
Speaker 3: Let's say the inexperienced lawyers or the lawyers that are
33:30
Speaker 3: new to this field have a lot of clients they
33:33
Speaker 3: benefit if there's a settlement, right sort of writing on
33:37
Speaker 3: the coattails of the more experienced lead lawyers.
33:41
Speaker 5: They could be. It sort of depends on what they're
33:44
Speaker 5: putting their money towards, right, So if they get a
33:47
Speaker 5: lot of funding and they put it towards marketing, but
33:50
Speaker 5: they hire a marketing company that's not doing a great
33:53
Speaker 5: job getting calls as they come in, you could end
33:57
Speaker 5: up with thousands of cases that are not very valuable.
34:01
Speaker 5: Or you can do your research, you can put them
34:04
Speaker 5: towards marketing with the companies that you trust, and you
34:07
Speaker 5: can be working them up as they're coming in, and
34:09
Speaker 5: there's just different approaches. But I think the concern is
34:13
Speaker 5: that some of these firms may have lots of cases
34:16
Speaker 5: that actually don't qualify for the court. Maybe, like for instance,
34:21
Speaker 5: if we talk about Camp La June, which I wrote
34:23
Speaker 5: a piece on this last year. You know, some of
34:26
Speaker 5: the law firms had clients who were fake, like they
34:28
Speaker 5: gave them a fake address. They just wanted to get
34:30
Speaker 5: in on potential settlement because they see these advertisements. So
34:34
Speaker 5: I think, yes, they could be a big part of
34:35
Speaker 5: the settlement, but their cases still have to qualify. It's
34:38
Speaker 5: also have used the product and been injured by it
34:41
Speaker 5: in a specific way.
34:42
Speaker 3: And is there any concern that the lawyers are thinking
34:46
Speaker 3: about their investors and their investment before their clients' concerns.
34:51
Speaker 5: Some attorneys believe that that is the case. It's hard
34:54
Speaker 5: to know really what's going on behind closed doors, but
34:57
Speaker 5: there have been allegations that, in particular end the Johnson
35:02
Speaker 5: and Johnson talcum powder cases, there have been law firms
35:05
Speaker 5: accusing other law firms of wanting to accept the bankruptcy proposal,
35:09
Speaker 5: but then only because they're motivated by having to pay
35:13
Speaker 5: back their loans to the investors. So that's definitely alleged
35:17
Speaker 5: a lot. Whether it's actually happening, it's hard to say,
35:20
Speaker 5: but I know that a lot of lawyers are concerned
35:22
Speaker 5: that that's happening.
35:23
Speaker 3: Are there firms that have decided to get away from
35:26
Speaker 3: mass torts because of the length of time involved in
35:29
Speaker 3: these cases.
35:31
Speaker 5: I think that there are some, at least on the
35:33
Speaker 5: funding side. There are litigation funders that try to have
35:36
Speaker 5: a more diverse portfolio. So if they're going to invest
35:39
Speaker 5: in firms that have mass torts, they also want those
35:42
Speaker 5: firms to be handling other personal injury cases because those
35:46
Speaker 5: are shorter term, and you know, that can sort of
35:50
Speaker 5: keep money coming in while they wait on these big torts.
35:53
Speaker 5: I think that as they enter this period where they're
35:56
Speaker 5: looking for another sport, they're just looking for firms that
36:00
Speaker 5: are really aware of that and are just trying to
36:03
Speaker 5: be as diverse as possible. There are many funders who
36:06
Speaker 5: don't do math torts at all because they do not
36:09
Speaker 5: like their duration issues. You know what I heard from
36:11
Speaker 5: Andrew at s Fier Bank. You know, he saw this
36:14
Speaker 5: happening years ago and thought I need to move farther
36:17
Speaker 5: away from this while still having some money exposure in
36:21
Speaker 5: math tors. But also the smaller single cases.
36:24
Speaker 3: Well, your story is really fascinating. Emily, thanks so much.
36:28
Speaker 3: That's Emily Siegel, Bloomberg Law Senior Reporter. And that's it
36:32
Speaker 3: for this edition of the Bloomberg Law Podcast. Remember you
36:34
Speaker 3: can always get the latest legal news by subscribing and
36:37
Speaker 3: listening to the show on Apple Podcasts, Spotify, and at
36:41
Speaker 3: Bloomberg dot com, slash podcast, slash Law. I'm June Grosso
36:45
Speaker 3: and this is Bloomberg