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Weekend Law: Trump's Latest Targets & NFL · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
0:08
Speaker 2: They have a representative, Ilhan Omar, who they say married
0:14
Speaker 2: her brother.
0:15
Speaker 3: It's a fraud.
0:17
Speaker 2: She tries to deny it now, but you can't really
0:19
Speaker 2: deny it because it just happened. She shouldn't be allowed
0:23
Speaker 2: to be a congresswoman, and I'm sure people are looking
0:25
Speaker 2: at that.
0:26
Speaker 3: And she should be.
0:27
Speaker 2: Thrown the hell out of our country.
0:29
Speaker 4: Representative Ilhan Omar has been a target of President Trump's
0:33
Speaker 4: ire for years. But this week, there was a startling
0:36
Speaker 4: escalation in the Trump administration's scrutiny of the Minnesota Democrat.
0:41
Speaker 4: Federal agents searched her D.C. home on Monday, just weeks
0:45
Speaker 4: before the midterms. And federal prosecutors issued more than a
0:49
Speaker 4: dozen grand jury subpoenas to her family members. The scope
0:54
Speaker 4: of the investigation into Omar is unclear. although Homeland Security
0:59
Speaker 4: Secretary Mark Wayne Mullen has suggested that they're examining potential
1:04
Speaker 4: crimes related to her family's immigration paperwork. The Somalia-born congresswoman
1:09
Speaker 4: has repeatedly denied allegations of wrongdoing, calling them false and
1:14
Speaker 4: politically motivated. Joining me is an expert in immigration law,
1:18
Speaker 4: Leon Fresco, a partner at Holland & Knight. He was
1:21
Speaker 4: the head of the Office of Immigration Litigation in the
1:25
Speaker 4: Obama administration. Leon, start by telling us how Omar became
1:29
Speaker 4: a U.S. citizen.
1:31
Speaker 1: So there's a key legal fact that's not really being
1:33
Speaker 1: discussed here. And this is that Representative Ilhan Omar was
1:37
Speaker 1: never naturalized herself. She never actually went to a naturalization proceeding.
1:42
Speaker 1: She derived citizenship automatically by operation of law the day
1:48
Speaker 1: her father took the oath because she was a lawful
1:51
Speaker 1: permanent resident under 18 living with him. And so that's
1:55
Speaker 1: the distinction that's driving everything in this case, because one
1:59
Speaker 1: of the things they're looking at is, was she really
2:02
Speaker 1: under 18 on the day her father naturalized in 2000?
2:07
Speaker 1: And then there's a separate issue about whether her father
2:10
Speaker 1: should have been able to naturalize because he persecuted people
2:13
Speaker 1: as part of the Somalian military.
2:16
Speaker 4: In 2019, during Trump's first term, there was a review
2:20
Speaker 4: of her immigration status that looked into those two questions,
2:25
Speaker 4: but found no wrongdoing. So now they're re-examining that?
2:29
Speaker 3: Right.
2:29
Speaker 1: So in 2019, you had a fraud detection officer look
2:33
Speaker 1: at the birth date and the father's file, and they
2:35
Speaker 1: issued a one-page memo saying that there was nothing to pursue,
2:39
Speaker 1: that there was insufficient evidence. And both of those theories
2:42
Speaker 1: were specifically examined. Now, Since this was not a trial,
2:46
Speaker 1: you're not going to have double jeopardy on that investigation.
2:49
Speaker 1: But here's the key thing. It is now Brady discovery material,
2:54
Speaker 1: meaning that the government will have to produce this memo
2:58
Speaker 1: and it can be used by Congresswoman Omar to show
3:03
Speaker 1: that there was not a knowing false statement because you
3:07
Speaker 1: have to show evidence. that an adjudicator would likely have
3:10
Speaker 1: made a different result, given the data that they know.
3:13
Speaker 1: And if you have evidence of an adjudicator not making
3:16
Speaker 1: that same result, then you can actually say, you see,
3:20
Speaker 1: in 2019, they said this was a nothing burger. So
3:23
Speaker 1: why are you saying this was a massive misrepresentation that
3:26
Speaker 1: would have changed everything now?
3:27
Speaker 4: Is it difficult, particularly in African countries? To get accurate
3:32
Speaker 4: birth records in Somalia, where Omar was born, only 6%
3:36
Speaker 4: of births were registered with the government. So it's a
3:40
Speaker 4: question whether there is evidence of her birth date.
3:43
Speaker 1: This becomes a separate problem, and it's a huge one,
3:47
Speaker 1: which is in a lot of countries, and you can
3:49
Speaker 1: go to the State Department website and see this. they
3:52
Speaker 1: don't issue birth certificates. And then what you have to
3:54
Speaker 1: do is get birth affidavits. That is that a bunch
3:59
Speaker 1: of people will sign affidavits saying, yes, I can attest
4:03
Speaker 1: that you were born on this day, and maybe you
4:05
Speaker 1: can be lucky enough to get a hospital record that
4:08
Speaker 1: could show it. And so that's a separate problem is
4:11
Speaker 1: how do you ever actually disprove that her birth date
4:16
Speaker 1: is her birth date.
4:17
Speaker 4: So let's just say her father lied on the paperwork
4:21
Speaker 4: he submitted, either way, by her age or by his
4:25
Speaker 4: military history. What could the government do with that?
4:30
Speaker 1: So the normal way the government would pursue a lie
4:35
Speaker 1: on a citizenship application is to give you notice that
4:40
Speaker 1: that they're going to denaturalize you. Of course, if it's
4:43
Speaker 1: within the statute of limitations, which is five years for
4:45
Speaker 1: a government misstatement, they can prosecute you for a false statement.
4:49
Speaker 1: But this was in 2000. So the statute of limitations
4:52
Speaker 1: has long passed. But a normal person could be prosecuted
4:56
Speaker 1: for a false statement, a living person. But the living
4:59
Speaker 1: person could also be placed in denaturalization proceedings where they're
5:03
Speaker 1: given notice and then there's an opportunity to respond. And
5:07
Speaker 1: then there's a hearing in front of a federal district
5:09
Speaker 1: judge about whether there was a misrepresentation and it was
5:14
Speaker 1: material such that this would have affected the citizenship application
5:19
Speaker 1: such that the person should be denaturalized. The problem is
5:22
Speaker 1: because Omar's father is dead, this is where there's not
5:26
Speaker 1: a lot of pavement in the road, as one would say,
5:30
Speaker 1: to show where's the case law on denaturalizing dead people.
5:35
Speaker 1: And that's what they're going to have to do here.
5:38
Speaker 1: And obviously there's due process issues because Omar's father is
5:42
Speaker 1: not there to contest the charge, number one. And then secondly,
5:47
Speaker 1: Omar herself, should she be punished even if that was
5:51
Speaker 1: the case for a misrepresentation that her father made when
5:54
Speaker 1: she didn't make a misrepresentation? And the denaturalization statute itself
5:59
Speaker 1: talks about the person having to make a misrepresentation, not
6:03
Speaker 1: their family member.
6:05
Speaker 4: The authorities are talking about a possible crime. Do you
6:08
Speaker 4: see any evidence of a possible crime as far as
6:11
Speaker 4: the immigration paperwork?
6:13
Speaker 1: So there would be no crimes that survive the statute
6:16
Speaker 1: of limitation. If there was a false statement on the
6:18
Speaker 1: citizenship application, that was in 2000. So there's a 10-year
6:23
Speaker 1: statute of limitations for that. And that takes us to 2010.
6:26
Speaker 1: Any other false statement would be five years. The only
6:29
Speaker 1: issue is this. Is she still lying about things? If
6:32
Speaker 1: they know that she's lying about her date of birth
6:35
Speaker 1: and they can prove that she knows, then is a
6:38
Speaker 1: recent passport application or a recent voter registration application or whatever,
6:44
Speaker 1: are any of those within the statute of limitations that
6:47
Speaker 1: they could prosecute her for lying about her date on
6:50
Speaker 1: any of those?
6:51
Speaker 4: If the investigation doesn't lead to any of the results
6:54
Speaker 4: we've been talking about, the administration is exploring the possibility
6:59
Speaker 4: of revoking her citizenship certificate. What is that and how
7:04
Speaker 4: is that done?
7:05
Speaker 1: This is a fascinating provision that is almost never used,
7:11
Speaker 1: but the idea is to flip the burden of proof.
7:13
Speaker 1: So let me take you through this. So when Ilhan
7:17
Speaker 1: Omar's father became a natural life citizen, the way she
7:20
Speaker 1: was able to get her passport... is by filing an
7:23
Speaker 1: application called an N-600, which says, hey, I got citizenship
7:28
Speaker 1: too on that day. And you get a piece of
7:29
Speaker 1: paper that's called a certificate of citizenship. She didn't naturalize,
7:33
Speaker 1: but she became a citizen. And so what Section 342
7:37
Speaker 1: of the INA does is it would let USCIS administratively
7:42
Speaker 1: cancel that certificate of citizenship. if they can say that
7:48
Speaker 1: the citizenship was illegally or fraudulently obtained. And so what
7:52
Speaker 1: happens is they have to give her a notice of
7:54
Speaker 1: intent and 60 days to respond. And that's it. Then
7:58
Speaker 1: there's a USCIS officer who can decide yes or no.
8:02
Speaker 1: And if they decide, yes, we're revoking it, then that's
8:06
Speaker 1: the end of that. She doesn't have that piece of
8:08
Speaker 1: paper anymore. Now, what does that mean? That just means
8:12
Speaker 1: she doesn't have the piece of paper anymore. But She
8:16
Speaker 1: still has the status, but here's what happens. When she
8:19
Speaker 1: needs to operationalize her status, let's say by applying for
8:23
Speaker 1: a passport or by saying that she's a citizen for
8:27
Speaker 1: running for Congress again or anything else, now that flips
8:31
Speaker 1: the burden of proof. Now she has to prove she's
8:34
Speaker 1: a citizen and she has to prove what her birth
8:37
Speaker 1: date was instead of the other way around where the
8:40
Speaker 1: government says, has to currently prove that her birth date
8:42
Speaker 1: was false, she would have to prove it. So if
8:45
Speaker 1: we're right now in a 50-50 situation where nobody really
8:49
Speaker 1: can prove what her birth date was, she wins normally,
8:53
Speaker 1: but not in this interesting perspective where the problem is
8:56
Speaker 1: she can't get a document because the government has taken
8:59
Speaker 1: every document from her that would prove that she's a citizen.
9:04
Speaker 4: This shows the incredible twists and turns of the immigration
9:08
Speaker 4: law's always so complex.
9:11
Speaker 1: So when she wants to get those documents back, she's
9:14
Speaker 1: going to have to prove that she's a citizen instead
9:16
Speaker 1: of the government having to prove that she's not a citizen.
9:19
Speaker 1: It's such an odd thing, and there may be due
9:21
Speaker 1: process concerns with the government using the statute in that way,
9:25
Speaker 1: that maybe the whole scheme of Section 342 of the
9:29
Speaker 1: INA will get ruled unconstitutional as applied to Ilhan Omar.
9:33
Speaker 1: I mean, there's so many perspectives on this. She's going
9:36
Speaker 1: to end up having to fundraise millions of dollars in
9:39
Speaker 1: order to pay all the legal fees involved here.
9:42
Speaker 4: In all these situations, even revoking the citizenship certificate, does
9:46
Speaker 4: Omar have the option of raising as a defense that
9:50
Speaker 4: the government's actions are politically motivated?
9:53
Speaker 1: Correct. When she sues in the federal court to get
9:57
Speaker 1: her citizenship documents back, whether they be the passport, or
10:00
Speaker 1: the certificate, she can say that this was revoked in
10:02
Speaker 1: a sham process that was politically motivated. And the court
10:06
Speaker 1: might even give her discovery to see if whatever USCIS
10:10
Speaker 1: officer was instructed to do this or whatever else, any
10:14
Speaker 1: memos about this. We'll have to see. And normally you
10:16
Speaker 1: wouldn't be able to get discovery on this stuff. But
10:19
Speaker 1: depending on the federal judge assigned to the case, they
10:21
Speaker 1: might allow discovery. And that could open a whole can
10:24
Speaker 1: of worms up to an administrative record. Or if she
10:27
Speaker 1: was criminally prosecuted, she could say this was a malicious
10:30
Speaker 1: prosecution and to throw out the charges there.
10:32
Speaker 4: How long do you see this process playing out? Could
10:35
Speaker 4: it possibly play out to the end of the Trump administration?
10:40
Speaker 1: Absolutely. There's no chance that Ilhan Omar could be deported immediately.
10:45
Speaker 1: before the Trump administration is over. Zero chance of that.
10:48
Speaker 1: And you might say, well, why is that? Well, let
10:50
Speaker 1: me just give you one example. Mahmoud Khalil, has he
10:53
Speaker 1: been deported? And he's not even a congressperson. He's a
10:56
Speaker 1: person who's a lawful permanent resident and has insightful comments,
11:01
Speaker 1: you know, inciting people, and he has lies on his
11:04
Speaker 1: green card. And he's going through various layers of constitutional
11:08
Speaker 1: and administrative litigation. In his case, imagine in Ilhan Omar's case,
11:14
Speaker 1: There's no way that's going to be done before the
11:16
Speaker 1: end of the Trump administration. So if a Democrat is
11:19
Speaker 1: elected president or a Republican who doesn't want to move
11:22
Speaker 1: forward with Omar's case, then that case would just be
11:26
Speaker 1: dismissed and she'd be restored to whatever status she has
11:29
Speaker 1: today in October of 2026. And so that's likely to
11:33
Speaker 1: happen if she can beat out the clock.
11:36
Speaker 4: But in the meantime, as you said, a lot of
11:39
Speaker 4: legal bills. Great to get your insights, Leon. Thanks so much.
11:42
Speaker 4: That's Leon Fresco of Honda and Knight. Coming up next,
11:46
Speaker 4: Fed Governor Lisa Cook puts off her White House hearing
11:50
Speaker 4: as her lawyers question its impartiality. I'm June Grosso, and
11:54
Speaker 4: you're listening to Bloomberg. In August of 2025, President Trump
12:00
Speaker 4: took the unprecedented step of firing Lisa Cook from the
12:04
Speaker 4: Federal Reserve's Board of Governors, claiming she made false statements
12:08
Speaker 4: in mortgage papers.
12:10
Speaker 2: She seems to have had an infraction, and she can't
12:13
Speaker 2: have an infraction, especially that infraction, because she's in charge of,
12:17
Speaker 2: if you think about it, mortgages, and we need people
12:20
Speaker 2: that are.
12:21
Speaker 3: 100% above board.
12:22
Speaker 4: But this June, the Supreme Court refused to let the
12:25
Speaker 4: president fire Cook, finding he failed to provide her with
12:29
Speaker 4: enough advance notice and an opportunity to respond to accusations
12:33
Speaker 4: of wrongdoing. So now, Trump appears to be setting the
12:37
Speaker 4: groundwork to fire Cook again. announcing the formation of a
12:41
Speaker 4: committee to investigate the mortgage fraud allegations, a committee that
12:46
Speaker 4: consists of Trump's political appointees. Cook's attorneys expressed skepticism about
12:52
Speaker 4: the objectivity and fitness of the committee for its assigned purpose.
12:57
Speaker 4: Joining me is constitutional law expert David Super, a professor
13:01
Speaker 4: at Georgetown Law. David, Trump announced this Committee of Inquiry. Now,
13:05
Speaker 4: you have to go back to 1912. to find something
13:09
Speaker 4: similar where President William Howard Taft set up a commission
13:14
Speaker 4: to remove two officials from an independent agency. And it
13:18
Speaker 4: seems that's the only similar commission.
13:20
Speaker 3: Well, they do this in Australia all the time. It's
13:23
Speaker 3: called a kangaroo court. Obviously, the committee is completely stacked
13:28
Speaker 3: with people who are subject to the president's will and
13:32
Speaker 3: will do exactly what he wants and what he wants
13:34
Speaker 3: is to get rid of Lisa Cook. But I find
13:37
Speaker 3: it particularly remarkable that they put Kevin Hassett on the
13:40
Speaker 3: committee who might well get her job if she's removed.
13:45
Speaker 3: If that isn't a conflict of interest atop all conflicts
13:48
Speaker 3: of interest, I don't know what is.
13:50
Speaker 4: Are there any rules and regulations here about what's going
13:53
Speaker 4: to be admitted here? I mean, it just seems so unstructured.
13:59
Speaker 3: It is because this doesn't happen. It's been understood since
14:02
Speaker 3: the Federal Reserve was created. that it is supposed to
14:06
Speaker 3: be independent and that its effectiveness depends on its being
14:11
Speaker 3: independent of the president. The charges against her have been
14:15
Speaker 3: explored at great length, have been found to be completely vacuous.
14:20
Speaker 3: They're simply leverage for him to get her off of
14:25
Speaker 3: the Fed and to intimidate a couple of other members
14:28
Speaker 3: that he doesn't like either. So There's no precedent for
14:32
Speaker 3: this because this is a foolish and improper thing to do.
14:36
Speaker 4: It seems like they're trying to comply with what the
14:39
Speaker 4: Supreme Court said in its decision. Cook's attorneys have said
14:44
Speaker 4: they have grave doubts that this hearing is a legitimate
14:47
Speaker 4: one that would conform to the law. What is the
14:50
Speaker 4: law on this?
14:51
Speaker 3: Well, there's law provided by the Due Process Clause, and
14:54
Speaker 3: that's what the Supreme Court was getting at. And one
14:57
Speaker 3: of the requirements of the Due Process Clause is... A
15:01
Speaker 3: decision maker who has not previously made up their mind.
15:05
Speaker 3: This committee looks like it's about as dependent on Trump's
15:11
Speaker 3: preferences as it can get. It's, I suppose, collecting information
15:16
Speaker 3: on behalf of President Trump. But it's not doing it
15:20
Speaker 3: with any open-mindedness. And it's very obvious that whatever facts
15:25
Speaker 3: are presented, that he will go forward with the action
15:28
Speaker 3: he's already said he wanted to do. And then as
15:31
Speaker 3: soon as he's gotten rid of her, he'll go after
15:33
Speaker 3: Jerome Powell.
15:34
Speaker 4: Should Cook attend this hearing knowing who's on the committee?
15:38
Speaker 4: It appears she intends to go, although her lawyer said
15:41
Speaker 4: she wouldn't be able to attend on the date the
15:43
Speaker 4: White House set, which was November 5th, because she has
15:47
Speaker 4: official duties in Europe at that time.
15:49
Speaker 3: I think it's very, very risky to say this hearing
15:54
Speaker 3: is so bad I won't attend it. A lot of
15:57
Speaker 3: people are going to say we can't really tell in advance.
16:00
Speaker 3: So I think her better course would be to attend
16:04
Speaker 3: the hearing to present the facts, which are not harmful
16:07
Speaker 3: to her at all. and then to see what they do.
16:10
Speaker 3: This administration is so determined to adhere to any brainstorm
16:18
Speaker 3: the president may have that they will surely throw her out.
16:23
Speaker 3: And if they do so in a way that ignores
16:27
Speaker 3: the facts she's presented, then she will have a very
16:29
Speaker 3: strong procedural case.
16:31
Speaker 4: So she was first accused of mortgage fraud more than
16:35
Speaker 4: a year ago, and she hasn't been charged with any
16:37
Speaker 4: crime yet. So that says something. The Supreme Court in
16:41
Speaker 4: its decision didn't say specifically what for cause would be.
16:48
Speaker 4: They said whether cause for removal exists in any given
16:50
Speaker 4: situation will depend on the seriousness of the alleged conduct
16:54
Speaker 4: and the extent of any nexus to the governor's professional duties.
16:59
Speaker 3: The problem here is that she's not accused of misconduct
17:04
Speaker 3: in office. She's accused of checking a box that maybe
17:10
Speaker 3: she shouldn't have checked long before she was on the board.
17:15
Speaker 3: There's no indication that she received any benefits from this,
17:21
Speaker 3: as opposed to President Trump, who has been found to
17:26
Speaker 3: have misrepresented property values to get very substantial benefits from
17:32
Speaker 3: insurers and banks. So this is largely irrelevant, even if
17:37
Speaker 3: it was true, and there's pretty good reason to think
17:39
Speaker 3: it's not true. The broader picture here is that the
17:43
Speaker 3: Supreme Court, both in Dr. Cook's case and in the
17:47
Speaker 3: accompanying slaughter case, made very clear that the president is
17:51
Speaker 3: not entitled to the Federal Reserve Board of his choosing,
17:56
Speaker 3: that this part of the statute is legal, is constitutional,
18:01
Speaker 3: and any sensible president would take the message and drop it,
18:05
Speaker 3: just as any sensible president would read what the Supreme
18:10
Speaker 3: Court said about tariffs and drop it, or would read
18:13
Speaker 3: what the Supreme Court said about birthright citizenship and drop it.
18:17
Speaker 3: This president won't drop it. This president won't take a hint.
18:22
Speaker 3: And the Supreme Court, I think, is going to learn
18:25
Speaker 3: rapidly that if they want the president to do something,
18:29
Speaker 3: they need to put it in black and white in
18:31
Speaker 3: unmistakable terms. There's no subtlety with this president.
18:35
Speaker 4: So we can anticipate after this hearing, she'll be fired
18:38
Speaker 4: and then she'll appeal. It'll go up to the Supreme
18:42
Speaker 4: Court again.
18:43
Speaker 3: Oh, yes, absolutely. And I think What could very well
18:48
Speaker 3: happen is the Supreme Court will again set aside her firing,
18:52
Speaker 3: but for specific reasons rather than saying globally, leave Dr.
18:58
Speaker 3: Cook alone, you've got plenty of appointees on the board,
19:02
Speaker 3: and your economic stewardship is not so great that you
19:05
Speaker 3: should have complete control. But that's what they should do.
19:08
Speaker 3: They should say enough's enough. We've heard a second case now.
19:12
Speaker 3: We don't want to hear a third. Just drop it.
19:14
Speaker 3: But unless they say it in almost those words, he's
19:17
Speaker 3: going to keep at this thing.
19:18
Speaker 4: Cook's lawyers say the earliest she could appear before the
19:22
Speaker 4: committee would be after the Fed's policy meeting December 8th
19:27
Speaker 4: to 9th. So we shall see what happens there. Let's
19:30
Speaker 4: turn now to what may be the next indictment from
19:33
Speaker 4: the Justice Department of a perceived Trump enemy. Cassidy Hutchinson,
19:38
Speaker 4: formerly a top aide to then White House Chief of
19:42
Speaker 4: Staff Mark Meadows, was one of the star witnesses at
19:46
Speaker 4: the House investigations into the attack on the U.S. Capitol
19:50
Speaker 4: on January 6th. Among other things, Hutchinson testified that Trump
19:55
Speaker 4: urged his supporters to march to the Capitol despite knowing
19:59
Speaker 4: they were armed.
20:01
Speaker 5: Something to the effect of take the bags away. They're
20:04
Speaker 5: not here to hurt me.
20:06
Speaker 3: Let them in.
20:06
Speaker 5: Let my people in. They can march to the Capitol
20:09
Speaker 5: after the rally's over.
20:10
Speaker 3: They can march from the Ellipse.
20:12
Speaker 4: Federal prosecutors have been presenting evidence to a grand jury
20:17
Speaker 4: in D.C., and it appears to be about whether or
20:21
Speaker 4: not Hutchinson lied to Congress in her testimony. But it's
20:26
Speaker 4: so difficult to prosecute a perjury case.
20:29
Speaker 3: It's a very difficult case to make. And it's instructive
20:33
Speaker 3: that this case is being brought not by the U.S.
20:36
Speaker 3: attorney in D.C., who would be the ordinary people to
20:40
Speaker 3: prosecute a perjury case, but by the Civil Rights Division
20:43
Speaker 3: of the Department of Justice. I don't know how you
20:46
Speaker 3: could possibly say this is a civil rights case under
20:49
Speaker 3: the broadest reading of the civil rights laws, but I'm
20:53
Speaker 3: assuming that they are having the Civil Rights Division prosecute
20:57
Speaker 3: it because those are the only prosecutors they could find
21:01
Speaker 3: who would be willing to sign their names to these papers.
21:04
Speaker 3: I find Ketchley Hutchinson's case very strange, because in listening
21:09
Speaker 3: to her testimony before the committee, I don't know that
21:12
Speaker 3: I've ever heard a more careful witness. She did not
21:16
Speaker 3: talk about things she didn't know. She talked about things
21:19
Speaker 3: that she heard. And her actual testimony was extraordinarily careful.
21:26
Speaker 3: It's really hard to imagine how you could make a
21:29
Speaker 3: perjury case out of that unless you have some sort
21:35
Speaker 3: of recording of what conversation she had with people, and
21:40
Speaker 3: there's no indication they have that.
21:42
Speaker 4: The part of her testimony that really sort of blew
21:44
Speaker 4: up was when she said that She was told that
21:48
Speaker 4: Trump didn't want to return to the White House on
21:50
Speaker 4: January 6th. And at one point, he grabbed the wheel
21:53
Speaker 4: of his SUV from the Secret Service to try to
21:57
Speaker 4: join supporters at the Capitol.
22:00
Speaker 5: The president reached up towards the front of the vehicle
22:03
Speaker 5: to grab at the steering wheel. Mr. Engel grabbed his arm, said, sir,
22:09
Speaker 5: you need to take your hand off the steering wheel.
22:12
Speaker 5: We're going back to the West Wing. We're not going
22:15
Speaker 5: to the Capitol.
22:17
Speaker 4: That seems like a classic he said, she said case.
22:20
Speaker 3: Can they prove beyond a reasonable doubt that a Secret
22:23
Speaker 3: Service agent who would have been fired if he confirmed
22:26
Speaker 3: her story was telling the truth and that she was lying?
22:30
Speaker 3: No sane jury would spend 10 minutes on that. They'll
22:34
Speaker 3: need to seat a jury that has never corrected themselves
22:39
Speaker 3: about anything, that has never told the same story twice
22:42
Speaker 3: with different words. They're expectations of precision here are absurd,
22:49
Speaker 3: and then there's the broader question about whether this is
22:52
Speaker 3: political retribution, which obviously it is. Images of the President
22:57
Speaker 3: of the United States wrestling for the steering wheel of
23:00
Speaker 3: a Secret Service car are extremely unflattering, especially when he
23:04
Speaker 3: was trying to aid an attempt to overthrow the government. So, naturally,
23:10
Speaker 3: she's an embarrassment to the President And I think any
23:14
Speaker 3: jury and most grand juries would recognize that this is
23:18
Speaker 3: political retribution.
23:20
Speaker 4: And Trump called for her prosecution in 2024. So that
23:24
Speaker 4: seems to write the motion for dismissal based on vindictive prosecution.
23:30
Speaker 4: And to get a perjury conviction, prosecutors would have to
23:33
Speaker 4: prove beyond a reasonable doubt that Hutchinson lied, that she
23:37
Speaker 4: did it knowingly with intent, and that it was a
23:41
Speaker 4: material statement.
23:42
Speaker 3: They know they're not going to win a perjury case
23:45
Speaker 3: against Cassidy Hutchinson. They know they're not going to win
23:48
Speaker 3: an illicit possession of seashells case against James Comey. But
23:52
Speaker 3: they're still going to make them waste time and money
23:56
Speaker 3: defending themselves, and that will stick.
23:59
Speaker 4: Also, federal prosecutors are not supposed to bring a case
24:02
Speaker 4: if they don't believe they can prove it beyond a
24:04
Speaker 4: reasonable doubt.
24:05
Speaker 3: Yeah, that's very clear. Ethical federal prosecutors, for the most part,
24:10
Speaker 3: have resigned. They've been given a choice between their ethics
24:13
Speaker 3: and their jobs, and the more ethical ones have chosen
24:16
Speaker 3: their ethics and left. So you're left with people who
24:20
Speaker 3: have accepted that they're going to have to cut ethical
24:24
Speaker 3: corners for the most part, and you're left with people
24:27
Speaker 3: who are probably not as good lawyers.
24:29
Speaker 4: Or they're very inexperienced lawyers. Thanks so much, David, as always.
24:34
Speaker 4: That's Professor David Super of Georgetown Law. Coming up, the
24:38
Speaker 4: NFL says federal regulators have fumbled the supervision of calci.
24:43
Speaker 4: I'm June Grosso, and you're listening to Bloomberg.
24:46
Speaker 6: Excuse me, sir.
24:47
Speaker 3: Have you heard of calci?
24:49
Speaker 1: Yes, I have.
24:50
Speaker 3: They're the prediction market that lets you trade on anything
24:52
Speaker 3: from sports to culture.
24:54
Speaker 4: Just find an event and select yes or no, depending
24:57
Speaker 4: on what you think will happen. But the NFL is
25:01
Speaker 4: not happy with bets on football made on Kalshi, so
25:05
Speaker 4: much so that it's opposing Kalshi and the Trump administration
25:09
Speaker 4: in a high-stakes legal battle and asking the Supreme Court
25:13
Speaker 4: to step in. The NFL says federal regulators and prediction
25:17
Speaker 4: markets like Kalshi have refused to impose needed safeguards, opening
25:22
Speaker 4: a way for, quote, unscrupulous actors to cause mischief, trade
25:27
Speaker 4: on inside information, and harm game integrity. The league is
25:32
Speaker 4: urging the Supreme Court to allow states to regulate the
25:35
Speaker 4: prediction markets and to take up a pending appeal by
25:39
Speaker 4: New Jersey regulators in a clash over who should regulate Calchi.
25:44
Speaker 4: Joining me is securities law expert James Park, a professor
25:47
Speaker 4: at UCLA Law School. Jim, so New Jersey lost against
25:52
Speaker 4: Calchi at the Third Circuit. Explain why the NFL wants
25:56
Speaker 4: the Supreme Court to take up the appeal.
25:59
Speaker 6: Well, they're trying to get the Supreme Court to review
26:02
Speaker 6: a decision by the U.S. Court of Appeals for the
26:05
Speaker 6: Third Circuit, which held that it was likely that calci,
26:08
Speaker 6: a prediction market, could show that various event contracts relating
26:13
Speaker 6: to sporting events like NFL football games are swaps. And
26:18
Speaker 6: if they are swaps, they are regulated by courts. a
26:20
Speaker 6: federal agency called the Commodities and Futures Trading Commission, the CFTC.
26:26
Speaker 6: And the NFL is saying the CFTC is not up
26:29
Speaker 6: to the job, that they only have 500 employees. Pennsylvania has,
26:34
Speaker 6: you know, 300 or 400 employees alone that are dedicated
26:37
Speaker 6: to gaming. The CFTC does a lot of other important things,
26:41
Speaker 6: you know, overseeing commodities and derivative markets. How much attention
26:45
Speaker 6: are they going to be able to focus in on
26:48
Speaker 6: regulating event contracts relating to sporting events?
26:51
Speaker 4: The NFL says it's written multiple letters to the CFTC
26:56
Speaker 4: outlining the kind of contracts it objects to. For example,
27:00
Speaker 4: ones that can be easily manipulated by a single athlete,
27:04
Speaker 4: like field goals where a kicker could intentionally miss a
27:08
Speaker 4: It also objects to bets tied to injuries, officiating, and
27:13
Speaker 4: other things where insiders would know in advance, like the
27:17
Speaker 4: first play of a game. So does it seem like
27:20
Speaker 4: there is an unwillingness on the part of the commission
27:23
Speaker 4: to act on the NFL's concerns?
27:26
Speaker 6: It may be an unwillingness or an inability because the
27:29
Speaker 6: CFTC really doesn't have expertise with respect to regulating betting.
27:34
Speaker 6: And so they may simply... you know, not have the
27:37
Speaker 6: infrastructure in place to make considered determinations about these types
27:41
Speaker 6: of requests. That's one possibility. Another possibility is this is
27:45
Speaker 6: part of a deliberate policy choice by the CFTC to
27:50
Speaker 6: permit these types of sporting event contracts to flourish without regulation.
27:55
Speaker 6: That's also a possibility that it could be a deliberate
27:58
Speaker 6: policy choice.
28:00
Speaker 4: The NFL and the states are arguing that Sports prediction
28:05
Speaker 4: contracts are effectively gambling, not financial swaps, says Kalschi and
28:10
Speaker 4: the CFTC claim. Tell us about the parameters of that issue,
28:14
Speaker 4: which is key here.
28:16
Speaker 6: It's a tricky line to draw, right? A swap is
28:19
Speaker 6: basically an agreement that pays out depending on some occurrence
28:24
Speaker 6: or event. And the statute said it has to be
28:27
Speaker 6: associated with a potential financial, economic, or commercial consequence. And
28:31
Speaker 6: so the traditional reading of a swap is that I
28:34
Speaker 6: enter into swaps in order to hedge economic risks, right?
28:38
Speaker 6: Whether it's the risk that interest rates are going to
28:41
Speaker 6: go up or commodity prices are going to go down,
28:44
Speaker 6: I can enter into swaps to manage economic risk. The
28:48
Speaker 6: question is whether event contracts that are based on something
28:51
Speaker 6: happening in a sports game would qualify. They do have
28:56
Speaker 6: some economic impact, right, if you win a bet. But
29:01
Speaker 6: are you entering into the sports event contract to manage
29:04
Speaker 6: economic consequences? Usually not, right? And most of the time,
29:09
Speaker 6: it's just gambling. You're just betting. And it's not because
29:12
Speaker 6: you feel like if this team wins, that's going to
29:14
Speaker 6: have some impact on my business, although there may be
29:17
Speaker 6: a small number of cases where that could occur. So
29:20
Speaker 6: it's a very fine line as to what Congress meant
29:23
Speaker 6: when it says that the contract has to relate to
29:26
Speaker 6: various economic And, you know, the Third Circuit said, yes,
29:30
Speaker 6: there are economic consequences if the bet pays out one
29:33
Speaker 6: way or the other. The Sixth and Ninth Circuits said, well,
29:37
Speaker 6: it's not really about managing. sort of economic events that
29:41
Speaker 6: could affect your business or something of that nature, which
29:44
Speaker 6: is the more traditional understanding of what a swap is.
29:47
Speaker 4: It sounds like gambling to me, but there is that
29:50
Speaker 4: circuit split. And 39 states are supporting New Jersey at
29:55
Speaker 4: the Supreme Court. So a lot of impetus there for
29:58
Speaker 4: the Supreme Court to take up this case.
30:01
Speaker 6: There is a circuit split. And so that's a reason
30:03
Speaker 6: the Supreme Court will take on a case. The fact
30:06
Speaker 6: that so many states want the Supreme Court to hear
30:09
Speaker 6: the case also indicates maybe concern about the lack of
30:12
Speaker 6: clarity with respect to what the law is. Is gambling
30:16
Speaker 6: going to be regulated by the states or is it
30:18
Speaker 6: going to be regulated by the CFTC? And then you
30:21
Speaker 6: have other stakeholders like the NFL, which are affected by
30:24
Speaker 6: decisions relating to to gambling who want to weigh in
30:27
Speaker 6: as well. So there seems to be an outpouring of
30:31
Speaker 6: support for the Supreme Court to provide some clarity. And
30:33
Speaker 6: what the NFL has said in its amicus brief is that,
30:36
Speaker 6: you know, part of it is we want to know
30:37
Speaker 6: who the regulator is, right? If we know, then we
30:40
Speaker 6: can really focus in on the CFTC. If it is
30:43
Speaker 6: the CFTC, if not, you know, we don't want to
30:45
Speaker 6: waste time with a federal agency that is not truly
30:48
Speaker 6: the regulator of these event contracts.
30:51
Speaker 4: If the Supreme Court takes it, is the decision based
30:54
Speaker 4: on whether it's swaps or betting, or are there a
30:57
Speaker 4: host of other things that play in?
30:59
Speaker 6: I think it'll be a combination of the two. I
31:02
Speaker 6: think they'll first look at the statute. They'll try to
31:04
Speaker 6: interpret the language. They will try to evaluate, are they
31:08
Speaker 6: swaps under the text of the statute? And in addition
31:13
Speaker 6: to that, I think if the language is ambiguous, they're
31:16
Speaker 6: going to look at other considerations, such as the major
31:19
Speaker 6: questions doctrine and other broader policy concerns that may bear
31:24
Speaker 6: on what Congress intended to do. I think it's going
31:26
Speaker 6: to be a combination of all of those different things,
31:28
Speaker 6: which is why you have different circuits concluding differently, because
31:33
Speaker 6: the answer does not really point clearly in one direction.
31:37
Speaker 6: If you really focus in on the text, the Third
31:40
Speaker 6: Circuit was able to read the text reasonably as including
31:44
Speaker 6: event contracts relating to sports. And so that is certainly
31:48
Speaker 6: a plausible textual reading of the provision. And so it's
31:52
Speaker 6: really up to the Supreme Court to decide who is correct.
31:56
Speaker 4: I mean, how much will this be, you know, states'
31:59
Speaker 4: rights versus federal rights, where in their brief, the NFL said,
32:04
Speaker 4: what constitutional power allows Congress to override states' traditional police
32:09
Speaker 4: powers to regulate intrastate gambling? I mean, how much is
32:12
Speaker 4: that part of what the Supreme Court may consider if
32:16
Speaker 4: it takes the case?
32:17
Speaker 6: I think that'll be a big part of the Supreme
32:20
Speaker 6: Court's sort of concern in evaluating the case, because under
32:25
Speaker 6: the Third Circuit opinion, you will have effective federal preemption
32:29
Speaker 6: of state regulation of gambling. And there's a question of
32:32
Speaker 6: did Congress intend to do this when they passed Dodd-Frank
32:36
Speaker 6: in 2008. And as the NFL points out, at the
32:39
Speaker 6: time there was a federal ban essentially on sports gambling.
32:43
Speaker 6: And so it would seem odd for this Dodd-Frank law
32:47
Speaker 6: that gives the CFTC jurisdiction over swaps to be intended
32:51
Speaker 6: to permit the CFTC to regulate gambling when it was
32:54
Speaker 6: prohibited by another statute at the time. And the NFL
32:58
Speaker 6: cites the major questions doctrine. Do we read a statute
33:01
Speaker 6: in a way so that it would reconfigure a major
33:04
Speaker 6: national regulatory structure that has significant impacts for the economy.
33:09
Speaker 6: So I think it's going to be a very significant
33:11
Speaker 6: consideration for the Supreme Court.
33:13
Speaker 4: The CFTC under Trump, is the CFTC different? Is there
33:18
Speaker 4: a different outlook or a different regulatory approach under Trump
33:23
Speaker 4: than there was under Biden?
33:25
Speaker 6: It's definitely more deregulatory. And my understanding is they may
33:29
Speaker 6: still have just one commissioner. They don't have a balance
33:33
Speaker 6: of commissioners who can weigh in and at least make
33:35
Speaker 6: the case for a stronger regulatory approach. And so it
33:40
Speaker 6: is definitely different than under the Biden administration. And it's
33:43
Speaker 6: possible in a future administration that, you know, the CFTC
33:47
Speaker 6: could be more favorable towards regulation. So it's not quite
33:50
Speaker 6: clear what is best for the policy. You know, if
33:53
Speaker 6: you're against regulation, you know, it may not be a
33:56
Speaker 6: great idea to put all the power in the CFTC
33:58
Speaker 6: because maybe a later administration then decides we're going to
34:01
Speaker 6: write a whole bunch of rules against relating to gambling,
34:05
Speaker 6: and they're going to be very extensive. So that's certainly
34:07
Speaker 6: a possibility that could come down the line in two
34:10
Speaker 6: years or six years or however long it may take
34:13
Speaker 6: for a new Democratic administration to come in.
34:16
Speaker 4: So Kalshi is gambling that the CFTC will stay in
34:19
Speaker 4: this deregulatory mode. It is.
34:22
Speaker 6: It is.
34:23
Speaker 4: Also, Kalshi said that the CFTC's ongoing rulemaking addresses many
34:28
Speaker 4: of the NFL's supposed concerns. Do we know what the
34:32
Speaker 4: rules are yet?
34:33
Speaker 6: I don't think so. I think there's still a work
34:35
Speaker 6: in progress. And, you know, I think that what the
34:39
Speaker 6: NFL is saying is that it's just not comfortable working
34:43
Speaker 6: with this regulator, that it's got some concerns about what
34:46
Speaker 6: its approach has been. And that's why they've given some
34:49
Speaker 6: examples of proposals that they want the CFTC to adopt,
34:53
Speaker 6: which they have not adopted, or it does not appear
34:55
Speaker 6: that they're going to adopt. So even if they are
34:58
Speaker 6: going forward with rulemaking... I think the NFL's point is, well,
35:02
Speaker 6: they're not really listening to us, and they're taking an
35:06
Speaker 6: approach we think is going to harm the game, that's
35:08
Speaker 6: going to harm our business. And we would rather work
35:11
Speaker 6: with state regulators in this particular area.
35:14
Speaker 4: And the numbers are stunning. The NFL noted that, On
35:18
Speaker 4: the first Sunday of the 2026 season, more than half
35:22
Speaker 4: of all prediction markets trading volume, $ 1. 8 billion out of
35:26
Speaker 4: $ 3. 3 billion, was related to the NFL. And they said
35:30
Speaker 4: that any delay from the court will result in increasing
35:33
Speaker 4: consumer harm and risk to game integrity. But it seems
35:37
Speaker 4: like Major League Baseball is not concerned about that. Because
35:41
Speaker 4: five teams have made multi-year deals with Kalshi.
35:45
Speaker 6: Yeah, I think, you know, given the size of the
35:48
Speaker 6: amount that is being wagered on the NFL, given the
35:52
Speaker 6: profitability of the league, and really concerns about there being
35:56
Speaker 6: so many different things where corruption could come into the
36:00
Speaker 6: game in very subtle ways. And if we lose confidence
36:03
Speaker 6: in the integrity of the outcome, if we don't believe
36:06
Speaker 6: that it is a true competitive game, then... Fear is that,
36:12
Speaker 6: you know, fans are going to be turned off and
36:15
Speaker 6: do something else. Essentially, the concern is that there are
36:18
Speaker 6: secondary effects to manipulation and fraud, you know, on other stakeholders.
36:25
Speaker 6: And so the sort of speculation that's going on is
36:27
Speaker 6: something that the NFL is very concerned about. Because it's
36:30
Speaker 6: very hard to police. It's very hard to police things
36:33
Speaker 6: like officiating. It's very hard to police, you know, things
36:36
Speaker 6: like if somebody gets injured and things like that could
36:40
Speaker 6: really open up a big can of worms in terms
36:43
Speaker 6: of questions about what's really going on at critical times
36:46
Speaker 6: in these sporting events.
36:49
Speaker 4: I'd be surprised if the Supreme Court doesn't take this case.
36:53
Speaker 4: And we may learn as soon as December whether or
36:55
Speaker 4: not they'll take the case for the current term. Always
36:59
Speaker 4: a pleasure, Jim. Thanks so much. That's Professor James Park
37:02
Speaker 4: of UCLA Law School. And that's it for this edition
37:05
Speaker 4: of the Bloomberg Law Show. Remember, you can always get
37:08
Speaker 4: the latest legal news on our Bloomberg Law Podcast. You
37:11
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37:17
Speaker 4: slash podcast slash law. And remember to tune into the
37:20
Speaker 4: Bloomberg Law Show every weeknight at 10 p.m. Wall Street time.
37:24
Speaker 4: I'm June Grosso, and you're listening to Bloomberg.