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Tuesday night, House Speaker Mike Johnson told the Republican national convention, “We in the Republican Party are the law and order team.” He said that as they prepare to nominate a convicted felon to be president. A man who spent over a year lying to the National Archives and Justice Department about the fact that he was keeping classified documents in publicly accessible bathrooms and the ballroom at his Mar-a-Lago resort.
If you're shameless enough, you can say anything. Apparently, if you repeat it often enough, some people will believe it. Just like Donald Trump's claims that there is a two-tiered criminal justice system, and he's the victim of it. Nothing could be further from the truth. Today, we have the tale of two defendants under prosecution.
Tuesday afternoon, a jury convicted New Jersey Democratic Senator Robert Menendez on all 18 charges in the indictment against him. He was tried alongside two co-defendants. His wife, also charged, will be tried separately. Menendez was convicted of multiple conspiracies, bribery, extortion, wire fraud, obstruction, and other charges related to a scheme where Menendez traded his power as a senator for cash. And gold bars. It’s crass public corruption.
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A number of the charges, including honest services wire fraud and Hobbs Act Extortion, carry maximum 20-year sentences. Under federal sentencing guidelines, the Judge is likely to impose a sentence that is much lower, but it will still be tied to the dollar amount of the fraud, which is significant. Over half a million dollars in cash was recovered when search warrants were executed at Menendez’s home and his wife’s bank safe deposit box, and the guidelines include enhancements for people who abuse a position of public trust to commit their crimes, like the Senator did. Menendez will likely spend a meaningful amount of time in custody.
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DOJ first indicted Menendez in September 2023. Even with two superseding indictments adding additional charges, his trial began a mere eight months later.
Trump has been indicted in four separate cases:
In March 2023 by the Manhattan district attorney on state charges of falsifying business records related to hush money he paid to Stormy Daniels ahead of the 2016 election to procure her silence about their sexual encounter. He was convicted on all charges on May 30, 2024, but in the wake of the Supreme Court’s decision that Trump enjoys broad presidential immunity, Judge Juan Merchan is reevaluating the validity of the conviction, and sentencing has been postponed until September 18.
In June 2023 for mishandling classified documents and obstructing justice in federal court in the Southern District of Florida. Judge Aileen Cannon dismissed the case on July 15, 2024, ruling that the Special Counsel’s appointment violated the Constitution.
In August 2023, Trump was charged with election interference in connection with the 2020 election. Proceedings in that case have been stayed since late last year while Trump pursued an appeal and ultimately persuaded the Supreme Court to rule that he has immunity for official acts. That case was set to gear back up within the next couple of weeks, but Trump is now likely to seek a further stay following Judge Cannon’s decision on the constitutionality of the special counsel process.
In August 2023, Trump and 18 others were charged in a state RICO case in Fulton County, Georgia, in connection with the 2020 election. Four defendants have already pled guilty, but the case is on hold at least until December when a Georgia appellate court will consider whether District Attorney Fani Willis can continue to prosecute the case. Under Georgia law, they have until March 2025 to rule.
Of the four cases, all involving serious felony charges against Trump, one now stands dismissed, two are indefinitely delayed, and even the jury unanimously convicting him is in question. If there is, in fact, a two-tiered justice system, Trump is certainly the beneficiary of it.
When Menendez was indicted, there were no cries of witch hunt from the ranks of Democrats. There were no claims that the Justice Department had been weaponized. Apparently, there are some people in politics who still believe in the rule of law, just not in the party that claimed so boldly tonight that it is the party of law enforcement.
Senate Majority Leader Chuck Schumer, a Democrat, has called for Menendez to resign. Meanwhile, the Republican party is in the process of embracing Donald Trump as its nominee to lead the country.
It’s a discouraging moment. But Donald Trump is not inevitable. Four months is a long time in an election cycle, and a lot can happen. What we can do is to share ideas and information, like what’s in the newsletter tonight, with people around us. Trump has eluded justice in the courts, at least for now. But he doesn’t have to at the hands of the voters; that’s up to us.
Thank you for being here with me. And thank you to those of you whose paid subscriptions make it possible for me to devote time and resources to writing Civil Discourse. Let’s make sure we do everything we can to keep the Republic.
We’re in this together,
Joyce
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By Pam Martens and Russ Martens: June 17, 2024 ~
Ryne Miller, Former Sullivan & Cromwell Partner Who Became General Counsel of FTX.US
Last Monday, Robert J. Cleary of law firm Patterson Belknap filed a motion in the bankruptcy proceeding of Sam Bankman-Fried’s collapsed fraud, the FTX crypto exchange, seeking to launch three new investigations into legal work done by Sullivan & Cromwell for Bankman-Fried and FTX prior to the collapse of the fraud.
Cleary is the independent examiner appointed by the U.S. Department of Justice’s U.S. Trustee, which acts as a watchdog in federal bankruptcy cases. Adding to the embarrassment for Sullivan & Cromwell with the announcement of the new investigations is the fact that Sullivan & Cromwell fought against allowing the U.S. Trustee to appoint an independent examiner after it had maneuvered itself into the position of lead counsel to the FTX bankruptcy proceeding, despite its multitude of conflicts with FTX. The presiding judge in the bankruptcy case, John Dorsey, had sided with Sullivan & Cromwell in the matter.
The U.S. Trustee was forced to take the issue to the Third Circuit Court of Appeals. On January 19, a sharp rebuke to Sullivan & Cromwell and the judge was handed down. The court wrote in its decision:
“Under the Bankruptcy Court’s interpretation, the appointment of an examiner under either subsection of Section 1104(c) would be subject to a court’s discretion and a judge would have the final say as to whether an investigation was warranted. But this interpretation runs counter to the statute’s plain language and established canons of construction.”
The court added this:
“First, an examiner must be ‘disinterested’… This requirement of disinterest is particularly salient here, where issues of potential conflicts of interest arising from debtor’s counsel serving as pre-petition advisors to FTX have been raised repeatedly….”
The independent examiner’s June 10 motion explains the three new areas it wants to investigate as follows:
“The first recommendation concerns S&C’s representation of Sam Bankman-Fried… in connection with his purchase of the Robinhood Shares…This inquiry would focus on (1) the scope and contours of that representation, and (2) based on that representation, what, if anything, S&C knew or should have known about the FTX Group’s misconduct and/or fraud…
“The second recommendation concerns potential claims against the former shareholders of Ledger Holdings, Inc [parent of LedgerX]…that sold their interests prepetition to West Realm Shires Inc. [a/k/a FTX.US]…This inquiry would (1) seek to determine whether an avoidance action(s) is warranted with respect to unreleased shareholders, and (2) enable the Examiner to report on the underlying details of the prepetition sale of LHI to WRS, which report and findings would be in the public interest…
“The third recommendation concerns the ‘holes’ or balance sheet shortfalls at FTX.US…This inquiry would center on (1) the existence of and the reasons these holes arose at FTX.US, (2) whether the balance sheet holes were the result of commingling of customer or corporate assets, (3) the frequency and magnitude of the holes, and (4) how they were resolved and by whom….”
The independent examiner is asking for 10 weeks and $3 million to conduct the three new investigations. A hearing on the matter is scheduled for today in the federal bankruptcy court in Delaware before Judge John Dorsey.
The independent examiner had released a preliminary report on May 23, which found no wrongdoing on the part of Sullivan & Cromwell. That report, however, indicated that further investigations would be requested by the independent examiner.
Adding pressure on the independent examiner is the fact that powerful sleuthing into Sullivan & Cromwell’s work on behalf of FTX is being done by law firms representing plaintiffs who are suing Sullivan & Cromwell (S&C) in federal district court in Florida. The plaintiffs write in their complaint:
“For its part, S&C facilitated the scheme to defraud and RICO enterprise by agreeing to provide and providing legal services to FTX US and FTX Trading Ltd…S&C did so knowingly, recklessly, or with willful blindness to the nature of the RICO enterprise but within the scope of the S&C’s employment and in furtherance of the firm’s business. In fact, in exchange for S&C’s counsel in these matters, FTX paid S&C significant fees.”
There is no question that Sullivan & Cromwell’s ties to FTX were significant. One of Sullivan & Cromwell’s law partners, Ryne Miller, moved to FTX.US and became its General Counsel. Another former Sullivan & Cromwell lawyer, Tim Wilson, became General Counsel for FTX Ventures, the venture capital arm of FTX. Sullivan & Cromwell had previously represented the kingpin of the fraud, Sam Bankman-Fried, who was convicted in November 2023 on seven counts of fraud and conspiracy. The law firm had also previously represented the Head of Engineering at FTX, Nishad Singh, who pled guilty to fraud charges. According to Sullivan & Cromwell’s own bankruptcy court declaration, it had been involved in more than 20 legal engagements for FTX before it filed for bankruptcy on November 11, 2022. According to the declaration, the law firm’s legal work began 15 months prior to the collapse of the firm.
Among the three areas that the independent examiner is asking to investigate, the LedgerX deal may prove to be particularly problematic. The plaintiffs in the case in federal court in Florida allege the following:
“According to some FTX Insiders, S&C decided to intentionally keep FTX US Derivatives (formerly LedgerX) out of the FTX bankruptcy proceedings, with knowledge that it was in possession of approximately a quarter billion dollars of diverted FTX customer funds from which it could (and has) extracted significant revenue. In fact, from November 2022 to mid-January 2024, S&C’s income from matters just related to FTX has surged, exceeding $180 million—or 10% of the total revenue the 900-lawyer firm publicly stated it collected in all of 2022—with paralegals billing $595/hr. and partners billing up to $2,165/hr.”
The Florida complaint also raises the following bombshell allegation regarding the LedgerX deal:
“Through its work on the LedgerX acquisition and work in connection with LedgerX (d/b/a FTX US Derivatives) thereafter, S&C was privy to a software audit of the FTX systems, which Mr. Miller and then-CEO of LedgerX, Zach Dexter, oversaw. According to FTX Insiders, Mr. Miller became aware through that audit of the ‘back door’ in the FTX Platform code that allowed SBF [Sam Bankman-Fried] and his inner circle to embezzle FTX customer funds by funneling them to Alameda [Sam Bankman-Fried’s hedge fund], and communicated that fact to his mentors, Messrs. Dietderich and Eitel [lawyers at S&C], and others at S&C.”
The Florida case is Edwin Garrison, et al., v. Sullivan & Cromwell LLP. It has been filed in the U.S. District Court for the Southern District of Florida. The case number is 1:24-cv-20630. It is part of Multi-District Litigation (MDL) involving FTX.
Sullivan & Cromwell ranks among the oldest law firms in America. It was founded 145 years ago by Algernon Sydney Sullivan and William Nelson Cromwell in the financial district of lower Manhattan. During the Wall Street crisis of the 1930s, Sullivan & Cromwell built a reputation for defending Wall Street firms against shareholder lawsuits and antitrust actions. Sullivan & Cromwell also played a pivotal role in the 2008 financial crisis, the worst since the Great Depression. As Wall Street On Parade previously detailed, the firm’s Senior Chair, Rodge Cohen, paved the way for the Fed’s unprecedented $29 trillion bailout of Wall Street banks after their corrupt activities collapsed the U.S. economy in 2008.
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