Powell Investigation, Uvalde School Shooting & Lindsey Halligan

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0:34JPMorgan Chase and Company. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Sonesta Travel Pass makes traveling more rewarding, designed to help you get more out of every stay. Sign up at Sonesta.com to enjoy instant savings, bonus points, and valuable perks like early check-in, late checkout, room upgrades, and free stays over time.

1:23With Senesta Travel Pass, every stay brings you closer to your next reward. Choose from more than 1 ,100 hotels across 13 distinctive brands and unlock the best available rates when you book direct with Senesta Travel Pass. Here today, roam tomorrow. Join now at senesta.com. Terms and conditions apply. This is Bloomberg Law with June Grosso from Bloomberg Radio. On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. In an unusual, forceful written and video statement released Sunday evening, Federal Reserve Chair Jerome Powell announced an unprecedented move by the Trump administration.

2:14The threat of a criminal indictment over Powell's congressional testimony in June on ongoing renovations of the Fed's headquarters. But Powell said the move should be seen in the broader context of the administration's threats and ongoing pressure. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation.

2:55There was rare pushback from the Republicans over the criminal investigation. Senator Tom Tillis vowed to oppose any Trump nominees to the Fed until the matter of the grand jury investigation into Powell is resolved. And other Republican senators also offered pushback on the investigation. Joining me is Elliot Stein, Bloomberg Intelligence Senior Litigation Analyst. Elliot, so this investigation is connected to his congressional testimony. Tell us more about it. Yeah, that's right. The Fed has been undergoing renovations of its building for several years now. And Chairman Powell testified to Congress in June about those renovations because the Trump administration had been lobbying criticisms at the at the chair.

3:43And I think Republicans in Congress picked up on that as well. Although, you know, the larger context, of course, is that the Trump administration and Trump himself have been very dissatisfied with Chairman Powell and his policy on interest rates. So that's sort of a broader context, which Chairman Powell alluded to in his video response last night. But yeah, the allegations that the subpoenas are based on are that Chairman Powell lied to Congress in his testimony in June concerning the renovations and the alleged cost overruns of those renovations. So it's about the renovations. Do we know exactly what they're claiming Powell lied about?

4:23Well, it relates to certain aspects of the renovation that have to do with VIP dining rooms and special elevators and the type of marble that's being used and the discrepancies between what are in the documents that were submitted to the relevant agencies several years ago versus what Powell testified about in June. And so, you know, more specifically, the accusations are that these details, you know, concerning the marble and the VIP dining room, et cetera, are, you know, extravagant and too expensive. And even though those details were in the planning documents when Powell was asked about them in his testimony, he seemed to suggest that those weren't exactly the types of material that was going to be used or the type of specifications that were going to be included in the project.

5:20So it's sort of those discrepancies that the administration was criticizing and following his testimony to Congress. In June, a congresswoman from Florida referred the matter to the Justice Department, you know, sort of along the lines of what the Trump administration had been criticizing. I mean, if everyone who had discrepancies in their testimony before Congress was prosecuted, the Justice Department wouldn't have time for much else. These cases are not easy to prove. Where's the materiality and where's the intent? Yeah, I mean, in general, it's hard to prove criminal intent. On a matter like this, it seems very unlikely that this is the type of thing that the chairman of the Federal Reserve would intentionally be lying about to Congress.

6:10It seems like there's reasonable explanations for the discrepancies, including what Powell has explained and what the Federal Reserve itself posted on its website in an FAQ after his testimony, and that is that the Federal Reserve is allowed to make modest modifications to what was in the planning documents. And so that's really what's happening here. And so there really isn't, you know, any material discrepancy between what Powell said in his testimony and what's in the planning documents, certainly nothing that would rise to a criminal offense. And I think that's, you know, in part why you're seeing even Republican senators and congressmen pushing back on the news of the subpoena saying, you know, this is too much.

6:55And, you know, we value an independent Fed and we want to see this issue resolved quickly. And Senator Tom Tillis in particular noted, and he's on the Senate Banking Committee, who will oversee the nominations and confirmations of whoever Trump names to replace Stephen Myron with the anticipation of that person becoming the chair of the Fed when Chairman Powell's term ends in May. We're seeing Senator Tillis saying, look, I'm going to be reluctant to push forward any nomination, certainly not going going to confirm anyone until this investigation is resolved. With Tillis's and some other Republican senators' opposition, this could backfire on Trump.

7:36It could also backfire because it could give Powell motivation to stay on as a Fed governor after his term as chair expires in May. Yeah, no, I think that's exactly right. I think there's a number of unintended consequences that could backfire in the Trump administration here. You named a couple of them. One is the nomination process could be stalled. Another is, like you said, it could motivate Powell to stay on as a governor even after his term as chair ends. There's been a question about what he intends to do. Traditionally, chairs resign from the board after their term as chair ends and they don't stay on as governor.

8:12But in an effort to maintain Fed independence, this may motivate him to stay on. And then don't forget, next week on January 21st, we have argument in the Supreme Court in the Lisa Cook case. You know, the Supreme Court is not completely isolated from, you know, news headlines. And they may see this as yet another effort to get rid of Fed independents. And we've already seen comments from Justice Kavanaugh recently in the FTC slaughter case suggesting that he was very concerned about Fed independence. So to the extent the Supreme Court is already leaning towards a ruling in Lisa Cook's favor that would support Fed independents and make it harder for the president to get rid of Fed governors, this news, this subpoena may motivate the Supreme Court to write an opinion that actually makes it harder for the president to fire a Federal Reserve Board governor without, you know, real cause.

9:10Has President Trump been attacking the independence of the Fed since the beginning of his term? Is it something new? I'm pretty sure this has been going on since his term started, maybe even before, where he's been criticizing Chairman Powell. But, I mean, the broader context is, you know, that one of the hallmarks of this administration has been, you know, this unitary executive theory where the president aims to establish and maintain complete control over the executive branch. And, you know, we see that in obviously many, many respects. But in particular, we've seen it with the firing of commissioners of independent agencies like the FTC, which I mentioned earlier.

9:50And the president has tried to extend that to the Federal Reserve. But the Supreme Court, you know, a couple of times now, in particular in a ruling last May and then in the argument in the slaughter case last month, has indicated that the Fed is a little bit different. It's a quasi-private entity. It's not like other federal agencies. And as a result, this theory of a unitary executive branch may only go so far. What also doesn't make much sense to me is if they start this investigation now and take it to a grand jury, and let's say a grand jury does return with some kind of indictment. I mean, this would take years to prosecute and go through the appellate courts.

10:31Trump might be out of office before the case is over. That's exactly right. I mean, I think the trial itself, you know, could move relatively quickly. Criminal cases move relatively quickly. But yeah, if there is an indictment, this is going to drag on past, certainly past May, which is when Tara Powell's term as chairman ends. And so, you know, to the extent Tom Tillis is serious about stalling the nomination and confirmation process of anybody who is named to replace Chairman Powell as chair, you know, we could be in limbo. Whenever I hear about perjury cases, I always think about the Barry Bonds case, which had a lot of unique circumstances, but still it took seven years and his conviction was eventually reversed.

11:19You know, I always tell clients don't take the under and if you're betting in terms of how long a litigation takes. It almost always takes longer than you think. Thanks so much for joining me, Elliot. That's Bloomberg Intelligence Senior Litigation Analyst Elliot Stein. I'm June Grosso and you're listening to Bloomberg. This message is brought to you by Apple Card. Apple Card members can earn unlimited daily cash back on everyday purchases wherever they shop. This means you could be earning daily cash on just about anything, like a slice of pizza from your local pizza place or a latte from the corner coffee shop.

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12:32Retirement accounts, yep. High yield cash, yes again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market. Ad paid for by Public Holdings. Brokered services by Public Investing, member FINRA SIPC. Advisory services by Public Advisors, SEC Registered Advisor. Crypto services by ZeroHash. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. So there's a lot of noise about AI, but time's too tight for more promises.

13:10So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise, proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. A jury has been listening to emotional testimony in the trial of a former Uvalde schools police officer accused of endangering dozens of students during the May 24, 2022 attack at Robb Elementary School.

13:54I yelled to the kids to get in the classrooms. The second grade teachers had opened their doors to let us in and I went to the first classroom and I stood outside the door to make sure everybody had gotten off the playground. It was one of the worst school shootings in U.S. history, leaving 19 students and two teachers dead. Nearly 400 federal, state, and local officers arrived at the school, but 70 minutes passed before a tactical team finally breached the room and killed the shooter. I kept asking the operator, where are the cops? Where are the cops? The defendant, Adrian Gonzalez, was among the first officers to arrive on the scene, but prosecutors argue that he failed to stop or delay the gunman.

14:49He gets on the radio and says, shots are fired, he's wearing black, he's in the parking lot. He knows where he is, but Adrian Gonzalez remains. But the defense says Gonzalez is being scapegoated, arguing that he was one of the first officers to enter the school and that he evacuated children as police arrived. The monster who hurt those children is dead. My guest is trial attorney David Ring, a partner at Taylor & Ring. Dave, tell us about the charges in the case. The defendant is a former police officer for the Uvalde School District, and he was one of the very first responders to this horrific scene of this school shooting.

15:39And he's being criminally charged with 29 counts, felony counts, of abandoning or endangering a child. And what is that about? The prosecution is basically claiming that Officer Gonzalez failed to act when he came on the scene. He failed to do what he was trained to do. And the 29 counts are for these children that were killed or harmed in this horrific shooting. There were nearly 400 officers from various agencies involved in some degree to the police response. and they waited more than 70 minutes before a tactical team finally breached the room and killed the shooter. Why is Gonzalez being charged and not any of the hundreds of others?

16:30The prosecution's theory as to why Officer Gonzalez is being charged is because he was one of the first, if not the first, officer on the scene. And the prosecution claims that that Gonzales had the opportunity to engage the gunman before he really got to fire off too many shots and he failed to do so. They can't make that argument about, you know, many of the other officers because they obviously arrived later on the scene. The other important part of this prosecution is that the prosecution can argue that Officer Gonzalez had received active shooter training as part of his training as a police officer, and that he knew what he was supposed to do, and yet disregarded that training and, according to the prosecution, did really nothing.

17:24That's why he's being charged. The other person whose case has not started yet is the commanding officer, and it's similar counts, endangering children, but basically the theory against him is that he failed to put in action all the things he was supposed to do to control this scene. So what is Gonzalez's basic defense so far? Gonzalez's defense is that he came onto the scene and he never saw the shooter. He did not know where the shooter was. Never saw the shooter. You couldn't engage the shooter if you didn't know where he was. He also says he actually did things. He helped kids evacuate from the school from a different part of the building.

18:07And then at some point, he says when other officers arrived, he was being fired upon, or at least there were bullets flying from some location that would put his life in danger if he tried to engage the shooter. So he's got several defenses to these criminal charges that if believed by the jury should exonerate him. Yeah, I'm just wondering how the jury weighs the effect of then the officers waiting 70 minutes, how that sort of weighs in here with his guilt. It's really difficult. Like you said, there are 400 officers eventually at this scene. And really, one of them is being singled out for not doing his job.

18:48This is a very, very unique type of prosecution. You rarely see this type of prosecution of a police officer. And the reason it's unique, most of the times when you see a criminal case involving a police officer, it's because they did something actively wrong. They used excessive force and shot and killed someone, or they used excessive violence to harm someone. They actually did something that was criminal. Here, the argument is he did nothing. It's an omission, not an act. And that is a very, very difficult crime to prove against a police officer. There have only been a handful of these prosecutions accusing an officer of not doing something, and none of them have been successful.

19:36The evidence that the prosecution has been presenting, photos of the scene and the damage left behind that the judge warned were gruesome and shocking. You have witness testimony from former teachers who were sheltered in classrooms, parents of children who lost their lives, forensic experts about weapons and ammunition. So the prosecution is showing this nightmare scenario, this devastating shooting. But so far, it doesn't seem to be showing what the defendant did or didn't do. Look, the prosecution is putting on a case that is laying out this horrific, horrific scene, tragedy, horrible photos.

20:21When you hear what happened and the number of rounds that were fired by this gunman and all the things that he did and testimony from the parents and teachers who survived, it's horrific. But so far, not a lot of evidence against Officer Gonzalez. And there's been a very, very crucial ruling because one of the key issues in this case is that a witness is going to have to place Officer Gonzalez on the south side of this school building early on because that's where the shooter entered from. And if there's no witnesses that can place him on the south side, then he's going to successfully argue, I never saw the shooter.

21:04Well, early in this trial, a teacher testified that she, in fact, saw Gonzales on the south side of the building very, very early on. The problem with that was that that was the very first time she'd ever told anyone that. She had told prosecutors years ago that she never saw Officer Gonzales anywhere. And so when she testified to that at trial, that made the defense bring a mistrial motion because they basically got sandbagged by that testimony. That was something the prosecution had to share with the defense because it was such crucial testimony. And the first time it ever came out was when she was on the witness stand.

21:47And so what did the judge do? He didn't grant a mistrial, but he struck this witness's testimony in its entirety. And what does that mean? That means like it never happened. And so she was one of the very few witnesses that would place Officer Gonzalez on the south side of the building. And now her testimony has been stricken. It's a major blow for the prosecution. The judge told the jury to disregard her testimony. That's sort of like unringing the bell. How do they disregard it? It's true. It is unringing the bell, but it happens in every trial where a judge says, you know, someone testified to something improperly or incorrectly, and I'm telling you, you are to disregard it.

22:32If the jurors follow the law when they're in deliberations, they are not allowed to discuss that testimony at all. And most jurors follow the law. And so they're going to be back in the jury room. They're going to say, there wasn't a single witness who placed Officer Gonzalez on the south side of the building where the shooter was. And if someone says, well, this teacher did, they say, well, we can't consider that. So therefore, there's no evidence of that. So that's how it plays out. And the other way it plays out is if he is convicted and it goes to the court of appeal, that will be a very significant issue.

23:05Way for us the benefits and disadvantages of having him testify. It's going to be very interesting if Officer Gonzalez testifies. You know, the pros of him testifying is that he takes the witness stand and he can explain his actions to the jury. He can tell them, I arrived on the scene and I did this and I did that and I helped kids evacuate and I didn't know where the shooter was and I was never on the south side and I never saw the shooter. I didn't know where he was. I didn't know where the bullets were coming from. And that's powerful testimony coming from him. And if he's a likable person, a sympathetic person, he gets to talk about his career in law enforcement, it makes it very difficult for a jury to convict him and put all the blame on him.

23:54So that's the pro for him taking the stand and testifying. I mean, obviously, the downside is anytime a criminal defendant takes the stand, they're open to cross-examination. And cross-examination, the prosecution can really go after him on his training and his failure to follow his training and all the things we've discussed about what their theories are. Do you think the defense will try to present the picture that we discussed about all these officers waiting more than 70 minutes before they entered the building and what effect that had? I mean, that's obviously been part of the trial, but I also think that the defense is really going to hone in on, because it is undisputed that Officer Gonzalez was one of the first to the scene.

24:45So I think the defense will really focus in on, one, he did not know where the shooter was. Two, he was not just sitting around doing nothing. He was helping children escape the school from a different location. and three bullets were flying. He didn't know where they were coming from. And if he tried to enter the school and tried to engage the shooter, not knowing where he was all by himself, he probably would have ended up killed. Is this the kind of case that usually is not prosecuted criminally, but where we see civil actions for damages? Very, very rare. You see this type of case prosecuted criminally because, as we discussed, it's an omission to act.

25:31And so you very, very rarely see that. On the civil side of things, I mean, not to get too deep into the weeds, the problem with that is that the law doesn't allow individuals to sue police officers or law enforcement for not doing a perfect job. Otherwise, every time there was a crime and the crime wasn't solved or the investigation wasn't done perfectly, there'd be a lawsuit against a police officer. Like, hey, you should have done this. You should have done that. And we as a society don't want that. That's not efficient or effective. And so it'd be very difficult for a civil case to survive against Officer Gonzalez.

26:14Thanks so much for joining me, Dave. That's trial attorney David Ring of Taylor & Ring. This is Bloomberg. Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High-yield cash?

26:47Yes, again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market. Ad paid for by Public Holdings. Brokered services by Public Investing, member FINRA SIPC. Advisory services by Public Advisors, SEC Registered Advisor. Crypto services by ZeroHash. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. So there's a lot of noise about AI, but time's too tight for more promises.

27:23So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise, proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Travel smarter, not harder, at America's Best Value In by Sinesta, with convenient locations from coast to coast and value-packed comfort at every turn. It's a practical choice for road trips, Quick getaways and everyday travel that keeps things simple without sacrificing comfort.

28:03And when you're a Sonesta Travel Pass member, staying at America's Best Value In means earning points toward free nights, upgrades, and more every time you stay. Go to Sonesta.com to book your stay and unlock the best rates with Sonesta Travel Pass. Here today, Rome tomorrow. Join now at Sonesta.com. Terms and conditions apply. A Trump-appointed judge has ordered Lindsay Halligan to explain why she's continuing to call herself the U.S. Attorney for the Eastern District of Virginia, even though another judge found in November that she'd been illegally appointed to the position. That November finding led to the dismissal of cases against former FBI Director James Comey and New York Attorney General Letitia James.

28:49Judge David Novak's order on Tuesday gave Halligan seven days to file a pleading that justifies why the court shouldn't strike her title from indictments and explain why her identification does not constitute a false or misleading statement. The order came in the case of a man indicted last month on charges of carjacking and attempted bank robbery. The judge noted that his order was on his own initiative rather than in response to any motion by litigants in the case. And on a side note, the second highest ranking federal prosecutor in the Eastern District of Virginia was fired today after he reportedly refused to help lead the department's prosecution of Comey.