NBA Gambling Scandal, Third Term & House Maps

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1:46This is Bloomberg Law with June Grosso from Bloomberg Radio. On that tab are nine names, along with phone numbers, of some of the wealthiest and most famous people in the world. I put the numbers in my phone and composed a simple message. There'd be a game tomorrow night at the Cobra Lounge. There was a$10 ,000 buy-in. Two weeks later, around 2 a.m., there was a pot that was up to 1.3 million preflop. Call. With five players still in. But the game belonged to Player X. People wanted to say they played with them the same way they wanted to say they wrote on Air Force One. Do you understand that you are charged in count 20 with operating an illegal gambling business?

2:24The indictment in the NBA gambling scandal sounds a lot like the movie Molly's Game, high-stakes poker, where celebrities called face cards draw in unsuspecting rich players called fish who drop big money in illegal private games backed by organized crime. Federal prosecutors allege that Portland Trailblazers head coach Chauncey Billups and former player Damon Jones were the face cards who were on the so-called cheating team, luring big money players into rigged poker games where sophisticated technology like hidden cameras in poker chip trays, rigged card shuffling machines, and even x-ray equipment built into the tables helped them cheat the fish out of millions of dollars.

3:14Almost 30 other people are charged in the poker scheme, including members of the Bonanno, Gambino, and Genovese crime families with expected colorful nicknames like Flappy, The Wrestler, Black Tony, Big Bruce, and Pookie. My guest is former federal prosecutor Joshua Neftalis, a partner at Palace Partners. He prosecuted the real-life Molly Bloom and the others involved in that$100 million gambling ring that was fictionalized in the movie Molly's Game. Josh, the high stakes poker games in this indictment look a lot like those in Molly's Game and even use the same terminology. Yeah, I mean, it's funny.

3:55When I was an associate at Wachtell Lipton, I did an independent investigation for the NBA that culminated in something called the Petowitz Report, which is when a referee named Tim Donaghy was indicted in the Eastern District for being part of a scheme with LCN, where the allegations were that he was throwing games or betting on games. And then you fast forward to Molly's game, which is one of the first big cases I worked on when I was a prosecutor, where they are running illegal gambling businesses, including poker rooms, and you sort of mush the two together. And then you have these new Eastern District indictments.

4:27And tell us what the indictment says happened with these poker games. So there are two crimes being charged. The first one is operating an illegal gambling business. So it's the business aspect of it, which is generally what's called the house. So the people who are sponsoring the game are taking a rake or a percentage of the pot or the money on the table. So that's where the sponsors or the people running the game are profiting, regardless of what happens with the card. They're just taking a percentage of the money. That's what makes it illegal, in New York State at least. So you can play in a poker game for money, and that's not illegal.

5:04If the two of us ever had the pleasure of sitting down to play poker with a couple other people, that's totally okay. But in this case, they're saying that the game was rigged so that the so-called fish would lose? Right. That's like the added layer of it is sort of like a fraud piece, which is the game wasn't even fair. The card shufflers were rigged. The tables had some cameras set up that allowed them to see the cards. The cards were marked in some ways. People were wearing some sort of contact lens or glasses. It wasn't a fair game to begin with, in addition to being an illegal business. Phillips and Jones were referred to as face cards in the indictment.

5:41It said that everyone at the table who wasn't a target was in on the scam. They were charged with wire fraud and money laundering conspiracy, but weren't charged with operating an illegal gambling business. I mean, generally, the fraud and money laundering charges are more serious than the gambling charges, or at least they expose an individual to more jail time, potentially. Can you tell how strong the case is against them? It's always hard to tell when you read an indictment. An indictment makes it sound like it's obvious. It's a great case. I mean, if true, you know, the government always thinks it holds the best hand.

6:17That's why they brought the case. I'm sure there's another side of the story. Whether it holds up, I don't know. Chauncey Billups' attorney said, to believe that Chauncey Billups did what the federal government is accusing him of is to believe that he'd risk his Hall of Fame legacy, his reputation and his freedom. Well, that's exactly the point, which is these guys make a lot of money from their day job. Why would they risk it all here? Which, by the way, makes good sense and has a lot of jury appeal. If they actually took part in the games, what kind of defenses could they raise? It's always hard to tell from the indictment exactly what's going on.

6:49But I think part of it may be, listen, just being there doesn't mean they were part of it, right? They may be playing cards, they may be betting, they may be doing whatever, that doesn't mean they're in on it, which happens all the time, right? They may have been participating in what was it otherwise the illegal game. And the promoters may have been using that as a way to draw people in. But that doesn't mean that they were in on the whole scheme. So the charge is that from April of 2019 to the present, the rig poker scheme caused losses to the victims of$7 million. That doesn't seem a lot over six years and when the director of the FBI said the fraud is mind-boggling.

7:28I mean,$7 million is still a lot, but I agree with you. Given the amount of money that flies around in these games, I wouldn't call it mind-boggling. I mean, these high-stakes poker games, there can be millions of dollars changing hands in a night. To establish the money laundering and wire fraud, what do the prosecutors have to prove? The way to think of fraud is when someone makes a misrepresentation to someone to get them to turn over money and they lose money as a result. You have to make a misstatement to someone with the intent that you're defrauding them. And then laundering money is either you are moving money that was derived from a criminal scheme, or you are out of the scheme or you're moving money in to promote the scheme.

8:07Those are like the basic types of money laundering. But you have to have the fraud to prove the money laundering generally. Like the fraud is sort of a prerequisite. There are more than 30 defendants here. How do you try a case like this? I assume separate trials, but how is that decided? You can't try 30 people at once. It's not permitted. It's also just practically impossible. What generally happens in a case like this where this many people charged is those that sort of don't have much of a defense or they're not charged with a very serious client, they may just plead out and it could reduce into a smaller group of people if they choose to go to trial.

8:42That's what happened in the Molly's Game case. We indicted, I think, 33 people where there were three separate racketeering schemes. In the end, we never had a trial because everyone basically pled guilty. And then came the book and the movie. Do you think that the FBI pursued this investigation for so long because of the alleged mafia connections? I mean, when you have the mafia, when you have sports betting, when you have the integrity of the game at stake. Obviously, that interests a lot of parties. It's not necessarily clear to me that the FBI was looking at this since 2019. It may be that as the investigation went on, they learned about conduct that proceeded when they started the investigation.

9:21So that doesn't mean that they couldn't charge it if they had started the investigation in 2024, and then they learned actually all this is going on from 2019. And tell us about the second indictment involving sports betting, where Miami Heat guard Terry Rozier was charged. Sure. I mean, I think that's the one that goes to the integrity of the game. I kind of view that as the more serious of the indictments. The gist of it is that the NBA has a code of conduct. And one of the provisions of the code of conduct is that there's confidential information or non-public information. And in this case, it would be which players are injured, who's going to sit out, who may not play.

9:56And that information was being leaked and then used by people to make prop bets. And a prop bet is like a proposition bet where you can not necessarily even bet on who's going to win the game, but how a particular player will perform. And some of the bets were saying that someone would play or not play or score a certain number of points. And some of them were just bets on the outcome of the game. But here, it's akin to insider trading, but I don't want to suggest it is insider trading because it's a wire fraud case. This isn't securities fraud. But the gist is that there was non-public information about NBA players that was used to bet.

10:27And that violated the code of conduct. Well, in hyping up the indictment, the director of the FBI, Kash Patel, called it the insider trading saga for the NBA. One thing about Rozier, the NBA cleared him after an investigation, didn't they? I think the issue is the devil's in the details. I mean, my recollection of Rozier is that he may have texted one of the other members of the scheme saying that he was going to leave the game early. and there was discussion about bets being placed, which doesn't necessarily mean he wasn't hurt. But what it means is that he was telling someone who wasn't supposed to know that he was injured or that he wasn't going to play the whole game.

11:06The NBA is very good at this, at policing, betting, and the integrity of the game. Adam Silver is amazing as the commissioner, and they take this seriously. The question is, you know, did they have access to everything that the FBI had access to? The NBA doesn't have the powers of the FBI. These are two separate indictments, separate schemes that involve 34 defendants, only three connected to the NBA. Yet it was announced with such fanfare, about 20 people crowded on the stage, including the director of the FBI and New York City's police commissioner. The investigations date back years, and yet the announcements were made the opening week of the NBA season.

11:50This seems like a lot of hype. Oh, sure. That's definitely what the government's doing. They want to amplify the press impact of the indictments. And to the extent that it confuses what the NBA employees, players were doing, it just makes it more press worthy. Obviously, it matters if someone is actually applying for the NBA or working as a coach at the time they do certain of the conduct. That's why it would matter in terms of leaking the information. And then to the extent that these guys were doing something on their own time involving poker, it's kind of irrelevant. I don't think this is the type of investigation that, you know, needed to be announced on the eve of, you know, the timing was a little odd.

12:30When the FBI director shows up for an announcement of an investigation like this, again, criminal cases are serious. But, you know, this isn't like they broke the biggest insider trading case ever or this is a big terrorism case where the FBI director may show up. It's a big case in that it goes to the integrity of the game, but it's kind of just a run of the mill gambling case in the poker world. We'll see how many defendants are left when and if this goes to trial. Thanks so much, Josh. That's former federal prosecutor Joshua Neftalis of Palace Partners. Support for the show comes from Public.com.

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15:27Chase Sapphire Reserve for Business. It's the card that gives back all you put in. Learn more at chase.com forward slash reserve business. Chase for Business. Make more of what's yours. Accounts subject to credit approval. Restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank N.A., member FDIC. President Donald Trump has once again suggested he'd like to extend his stay at 1600 Pennsylvania Avenue for a third term. I would love to do it. I have my best numbers ever. Trump has flirted with the idea of a third term before. For example, in March, just a little over a month into his second term.

16:07They do say there's a way you can do it, but I don't know about that. I'm just telling you, I have had more people say, please run again. But this time there is also those Trump 2028 red baseball caps that sat on his desk during a meeting with congressional leaders this month. There's the think tank called Third Term Project. And there's even a Justice Department lawyer in Sixth Circuit oral arguments referring to a new administration, quote, three years in the future or seven years in the future. And of course, Trump has not explicitly ruled out a third term. Joining me is constitutional law expert David Super, a professor at Georgetown Law.

16:53So David, I reread the 22nd Amendment. it plainly states that no one can be elected president more than twice. I mean, how plain is it? How clear is it? It could not be clearer and it could not be plainer. It's short. It's sweet. It's to the point, not allowing anyone to run for a third term. Now, there are different kinds of scenarios out there that Trump allies have put forward. One of the arguments is that the 22nd Amendment only explicitly bars a person from being elected to more than two presidential terms, but doesn't say anything about serving a third term. So the theory is that Trump could run as vice president and then have whatever lucky candidate for president it is resign.

17:42And then Trump takes the White House. That doesn't work either because of the 12th Amendment, which says that any candidate for vice president must be constitutionally qualified to serve as president, which Mr. Trump isn't. In fact, Trump himself sort of dismissed that. He said, I'd be allowed to do that, but I think people wouldn't like that. It's too cute. Also, didn't Vladimir Putin sort of do something like that years ago, where he put a deputy in to serve in his place for one term, and then he took over? It's disappointing that this country is taking its political lessons from Russia these days.

18:24But yes, what Putin did was stepped down from being president for one term and let a trusted ally of his serve as a figurehead president while Putin ran things as prime minister, then came back and became president again. A few problems with that. One One is it's too cute. Two is we don't have prime ministerships here. So there's no obvious alternate role for Trump to go into to serve it. Three, Russia's limit is on consecutive terms. The 22nd Amendment is a limit on total terms. And four, why are we taking our political lessons from Russia? And just explain to get rid of the 22nd Amendment, what would it take?

19:09Repealing the 22nd Amendment would take a two thirds vote from both chambers of Congress and ratification by three-quarters of the states, which is 38 states. So you would need ratification from states like Connecticut and Massachusetts. Somehow, I don't think those states are going to be working very hard to get Mr. Trump a third term. Yeah, even House Speaker Mike Johnson dismissed repealing the 22nd Amendment. I don't see a way to amend the Constitution because it It takes about 10 years to do that. Speaking about the Speaker of the House, yet another theory is that Trump could become the Speaker of the House, which apparently posits that it's easy to be elected Speaker of the House.

19:54And then if both the president and vice president, who would have to be Trump allies, resign, he could take over. Yeah, I keep sending in my resume to be Speaker of the House and nothing ever happens. I'm not sure what the problem is. In theory, that could be said to be valid. The Speaker of the House is elected, and if the purpose of electing Mr. Trump's Speaker is to make him president, I think there's an argument that that would also violate the 22nd Amendment of the Constitution. It certainly puts a thumb in the eye of popular intent. We had had a four-term president, President Roosevelt. The country, across all political lines, concluded that that was too much power for any individual to have, that it resembled authoritarian countries too much, and we decided we didn't want to do that anymore.

20:50And this is, yet again, Mr. Trump and his allies disregarding the people's choice through their constitution. Have you heard any other theories of how he could become president for a third term? I mean, the other one, I guess, is very straightforward. Just do it and see if anyone stops you. And the Supreme Court has been willing to avoid a number of constitutional violations and most obviously declining to consider or allow anyone else to consider whether Mr. Trump was disqualified under the insurrection clause of the 14th Amendment. He may just take the position that he can run, he can do it, and he doesn't think anyone will stop him.

21:40Is this speculation hopeful in a way because Trump is still talking about legal ways to stay in office and not suggesting that he would just refuse to leave? Well, there has been talk in the past that he might do something like what you're suggesting. He made some comments about that in 2020, which I hope were not taken very seriously, certainly didn't deserve to be taken very seriously. But some of his supporters have suggested that he could somehow declare some kind of a state of emergency, someone called it a sovereignty crisis, and suspend elections on that basis. There's no authority whatsoever in the Constitution for that.

22:27So if he were to do that, he would effectively be repudiating the Constitution. And you think that the Supreme Court might not even step in if he decides to run for a third term? No, I think they would. I think this court is hoping against hope that he won't force their hand by doing something completely delegitimizing. But I don't believe that there are five justices who have so totally lost faith in the country that they would put up with that. I mean, it could be he's trolling the Democrats, he's entertaining his base, or he doesn't want to look like a lame duck. Yes, I think so. Presidents have often had a lot of trouble in their second terms in office.

23:14President Reagan was unstoppable in his first term and stumbled quite badly in his second. President Bush was very strong in his first and got the Great Recession and Hurricane Katrina in the second. And President Obama lost all kinds of steam by his second term. And I think President Trump doesn't want to follow that example. And was it President Reagan who suggested getting rid of the 22nd Amendment? He did. I'm not sure how seriously a number of presidents get fond of the job and start thinking that the 22nd Amendment is a bad idea. But I don't think anyone took him very seriously or moved very far with it, in part because President Reagan was already of quite advanced age.

24:02Of course, President Trump is much older. And Trump would be the oldest president in history by the time he leaves office. David, in the last nine months, Trump has already done so much to expand his presidential authority, and he's used the specter of national emergencies over and over again. For example, to impose tariffs, to send troops into Democratic-led cities, to crack down on illegal immigration, and on and on. He declared eight national emergencies in his first hundred days. Has any other president during peacetime exercised such power? No, there's nothing remotely close to this. Richard Nixon was accused with some justification of trying to build an imperial presidency, but I can't think of anything that Mr.

24:57Nixon tried to do that Mr. Trump hasn't done much more of, and I can think of many things that Mr. Trump has done that Mr. Nixon never dreamed of doing. President Lincoln used a great many powers during the Civil War, some of which may have exceeded is constitutional authority, but not on the level of what we're seeing here. Of the Supreme Court cases coming up that are going to test presidential authority, is the tariffs case the most significant or is there another one that's more significant? The tariffs case is extremely significant because the Supreme Court is filled with self-defined textualist, and it's almost impossible to find anything like the powers the president is claiming in the text of the statute he is citing.

25:51So the court is going to have to either abandon any pretense of textualism or limit the president's authority very dramatically there. The other case that I'm watching very closely is the case involving Dr. Cook and the Federal Reserve, because the Supreme Court basically told President Trump, you can fire anyone except a Federal Reserve governor. And he turned around and fired a Federal Reserve governor. If the Supreme Court is willing to let him do that, then they are effectively allowing themselves to be humiliated by the president. And we can't really expect much of them going forward. What do you think of Trump saying he's going to attend the Supreme Court oral arguments on the tariffs?

26:38I think oral arguments are fascinating and he's in for a good time. I think with most courts, when a party seeks to pressure them, the court feels considerable pressure to demonstrate its independence. If I were a lawyer at the White House or Justice Department, I would beg him not to do that. Well, we'll find out next Wednesday if Trump is in the audience for the oral arguments or not. It's always great to talk to you, David. Thanks so much. That's Professor David Super of Georgetown Law. Coming up next on the Bloomberg Law Show, the latest salvo in the national redistricting fight is coming from New York City.