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Fed Probe Showed Lack of Evidence 03/25 06:24
The Justice Department's investigation of a $2.5 billion renovation project
at the Federal Reserve didn't find any evidence of a crime, a federal
prosecutor privately conceded under questioning by a skeptical judge earlier
this month, according to a transcript of the sealed hearing.
WASHINGTON (AP) -- The Justice Department's investigation of a $2.5 billion
renovation project at the Federal Reserve didn't find any evidence of a crime,
a federal prosecutor privately conceded under questioning by a skeptical judge
earlier this month, according to a transcript of the sealed hearing.
That admission by Assistant U.S. Attorney Andrew Massucco came during a
March 3 hearing that was closed to the public, the transcript shows. Eight days
later, Chief Judge James Boasberg quashed government subpoenas issued to the
Federal Reserve, dealing a severe blow to the government's investigation.
In his March 11 ruling, Boasberg said the government had produced
"essentially zero evidence" to suspect Fed Chair Jerome Powell of a crime. The
judge, who was nominated to the bench by Democratic President Barack Obama,
also described prosecutors' justification for the subpoenas as "thin and
unsubstantiated."
During the earlier hearing, Boasberg asked the prosecutor from U.S. Attorney
Jeanine Pirro's office to specify any evidence of fraud or criminal misconduct
related to Powell's testimony about the renovation project or the construction
work itself.
"So what false statements did (Powell) make before Congress?" the judge
asked Massucco, according to the transcript.
"Well, we don't know is my first answer," replied Massucco, chief of the
criminal division for Pirro's Washington office. "However, there are certain
areas that he addressed that caused concern."
"Okay," the judge continued. "And then what evidence is there of fraud or
criminal misconduct in relation to the renovations?"
"Again, we do not know at this time. However, there are 1.2 billion reasons
for us to look into it," Massucco said, referring to the amount of the
project's cost overruns.
The Washington Post was the first to report on the details of the hearing
from the transcript.
The investigation has delayed Senate consideration of Kevin Warsh, President
Donald Trump's pick to replace Powell when his term ends May 15. Powell can
remain as chair past that date if no replacement has been approved.
"A mountain of evidence suggests that the Government served these subpoenas
on the Board to pressure its Chair into voting for lower interest rates or
resigning," the judge wrote.
Massucco said during the sealed hearing that there is no evidence that
prosecutors' motive for the grand jury subpoenas "is anything other than trying
to find the truth of the matter."
"And we have a right to do that," he added.
Robert Hur, an attorney who represented the Federal Reserve board of
governors at the March 3 hearing, said the subpoenas are part of a pressure
campaign to support Trump's push for lower interest rates.
"He clearly has very strong political motives to try to get lower interest
rates, but because of the safeguards that have been erected by Congress around
the Federal Reserve's independence when it comes to setting monetary policy, he
can't get it," Hur told the judge.
Pirro, a former Fox News host who was Trump's pick to lead the nation's
largest U.S. Attorney's office, derided Boasberg as an "activist judge" and
claimed he had "neutered the grand jury's ability to investigate crime." She
vowed to appeal his decision.
"This is wrong and it is without legal authority," she said at a news
conference earlier this month.
A Fed spokesperson declined to comment Tuesday.
The investigation by Pirro's office centered on brief testimony last June by
Powell before the Senate Banking Committee, when he was asked about cost
overruns on the Fed's extensive building renovations. The most recent estimates
from the Fed suggest the current estimated cost of $2.5 billion is about $600
million higher than a 2022 estimate of $1.9 billion.
In his ruling, Boasberg said the Justice Department rejected his offer to
let the government submit further evidence against Powell directly to him, so
that they wouldn't have to tip their hand to the Fed or Powell.
"The Court is thus left with no credible reason to think that the Government
is investigating suspicious facts as opposed to targeting a disfavored
official," the judge wrote.
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