Trump May Pardon You, But The Bank May Not | Bloomberg Law
Summary
Investment Theme: The podcast discusses the concept of "debanking," highlighting how financial institutions may deny services to individuals with criminal records, even if they have received presidential pardons.
Market Insight: Despite pardons, banks maintain strict compliance with regulations to prevent money laundering and ensure customer integrity, often resulting in denied banking services for individuals with past convictions.
Company Discussions: Specific cases include Elliot Brody and Mahmud Razabanki, who faced banking service denials from American Express and JP Morgan due to their criminal records, despite receiving pardons.
Regulatory Environment: The podcast touches on President Trump's executive order aimed at preventing "debanking" based on political or religious beliefs, urging financial regulators to reassess account review standards.
Legal Challenges: The conversation includes ongoing lawsuits by individuals like Brody and Razabanki against banks, challenging the denial of services despite pardons, highlighting the legal complexities involved.
Banking Practices: Banks like JP Morgan have begun revising policies to ensure decisions are not based on political or religious views, reflecting a shift in response to regulatory pressures and legal challenges.
Risk Management: Financial institutions prioritize risk assessments, often erring on the side of caution by denying services to individuals with any indication of financial crime, to mitigate potential liabilities.
Key Takeaway: The podcast underscores the tension between presidential pardons and banking regulations, illustrating the broader implications for individuals seeking financial services post-pardon.
Transcript
This is Bloomberg Law with June Graasso from Bloomberg Radio. >> On the first day of his second term, President Donald Trump granted full pardons or commutations to the more than 1,500 people convicted or charged in the January 6th riots at the US capital four years ago. >> So this is January 6th. Yeah, these are the hostages. Approximately 1,500 for a pardon. >> Yes, >> full pardon. >> That was just the beginning of what has been something of a pardoning spree for Trump. Today was the convicted founder of the crypto exchange Binance, Xiaoang Xiao. Last week, it was convicted former Republican Congressman George Santos. But it's one thing to be cleared by the president. It's another to be cleared by the banks. And some of the people pardoned during Trump's first term found that out when they were debanked. Joining me is Bloomberg senior reporter Tom Shoenberg. Tom, Republican fundraiser Elliot Brody, who was convicted for violating a lobbying law, and former CFO of social media company X, Mahmud Razabanki, who was convicted of making false statements were both pardoned at the end of Trump's first term. But explain how those White House reprieves only go so far. >> So both, you know, Mr. Brody and Mr. Banky kind of recently within the you know last year or so sought banking services. Both had applied you know for credit. Brody from American Express, Bonnke from JP Morgan, and were denied. And as they pushed for explanation as to why in both instances were told that it was due to a criminal record that they had had, you know, that was tied to the pardon that they received from President Trump in his first term with Banka. That also meant he had applied for a credit card with Bank of America and a 529 account that involved a fidelity and the same situation. He was denied accounts or denied access to credit. >> Is there really a term debanked? There is now um there is now and it's a good question because when I was uh interviewing people for the article uh including Liz Oyer who is former pardon attorney at the justice department she asked well what is debanking because you know until recently it wasn't it wasn't really a term but it is now and is also used in uh both these lawsuits that were brought by Mr. Broady and Mr. Banky. Is a pardon meant to erase the legal conviction on your record or is it meant to wipe the slate clean? >> Really in terms of how it's been interpreted really is erases that legal stain of the conviction, right? And I think in terms of financial services, what these cases are sort of raising to an extent is does that necessarily override these risk assessments of private lenders that are required under law to prevent against money laundering and to know their customer which usually is a look back on their history both financial but also criminal history. >> When you get a pardon, is your criminal record expuned or is there sort of a big red stamp on it? You know, pardon? So if you if you go to the criminal dockets, you would see their note that the case was dismissed or you would see that pardon in there in some fashion. So for Mr. Brody, he had pleaded guilty to account of conspiring to violate the Foreign Agents Registration Act in October 2020, but he had yet to be sentenced when President Trump pardoned him. So what you see in his record is you see that his attorneys moved to dismiss the case because of that which then happened. So it's logged there. In terms of Mr. Abanki, you know, he was uh convicted way back in 2010 of multiple crimes tied to Iranian sanctions and on appeal, two of those counts were thrown out. So he had one sort of remaining conviction when he was pardoned for uh false statements to investigators. So, in terms of Banky, when you pull up sort of say the press release from the Manhattan US Attorney's Office, at the top, you will see an update on there in red. So, the press release stays laying out, you know, extensively what he was convicted of by a jury. But at the top in red, it says, you know, update and it notes both the appellet and then it says, you know, he received a presidential pardon for the fourth conviction. So the record remains and you can also pull up those cases and you can look at transcripts and see you know in the case of Mr. Brody what he said to the judge at the time when he was pleading guilty. >> Who is representing Boydy and Banky? >> Yeah. So they're they're represented by a firm called Sher Jaffy. It's a boutique firm here in Washington DC. They've really done a lot of work on sort of political conservative causes. They've brought cases on behalf of uh America First Legal, which is uh an advocacy group that was co-founded by current White House Deputy Chief of Staff Steven Miller. They've also did a lot on behalf of Elon Musk some years ago when he said he would have legal representation for people that may have been penalized for uh what they've said on his uh social media network, Twitter and then X. And so they famously kind of represented a Disney actress who had lost her job because some postings online. Those are just a a flavor of some of the cases that they've they've brought. >> Some MAGA people think that conservatives are being debanked for their political beliefs and you write that it's become an obsession with some including President Trump. >> Yes. I mean, President Trump or the Trump Organization has sued Capital One Financial Core making accusations that they had improperly kind of closed hundreds of accounts that the Trump Organization had and Capital One denied any sort of wrongdoing here. They moved to have the case dismissed. You know, that's in front of a judge right now. And you know the argument on their end is that they had the right to cancel accounts based on sort of the contracts that they had for those accounts. You know it's been a personal issue for the president. Additionally, in August, he issued an executive order directly at this issue um called guaranteeing fair banking for all Americans in which he sort of calls out the quote unquote debanking of, you know, specifically conservatives and others for, you know, whether political or religious reasons and orders financial regulators to remove some of the, you know, standards they had in reviewing accounts at institutions as well as kind of looking back and see whether any people's accounts had been closed due to whether political, religious reasons or some other sort of unfair determination. So that's ongoing right now. >> I mean is there any evidence that banks are are targeting specifically targeting conservatives because of their political views? After January 6th, there were a lot of sort of stories uh coming out. You know, there was a lot of concern that people were losing their accounts in some way. I mean, banks have a lot of leeway in terms of deciding whether to uh close an account. They kind of use this term reputational risk. That's kind of a catchall when sort of making those determinations. And that also includes sort of looking at, you know, news media accounts involving people. that's one thing they look at. And so I've seen it on sort of both ends. I mean, I think on the Democratic side, Elizabeth Warren and others have also been very vocal about claiming that certain Americans were losing their banking, specifically Muslim Americans, you know. So, it has been on on both sides of the political aisle. >> Since the executive order, have banks been making changes? Some got out ahead of that. You know, JP Morgan, you know, beginning even after the election last year had started making changes, you know, both in public materials and then in their own policies, specifically noting that that it would not, you know, base decision-m on accounts on religious or political views. So, you're seeing it there. You're even seeing it in terms of these cases. Mr. Boni, you know, one of the things that happened after he brought his case over not receiving credit from uh JP Morgan is it happened that he had two accounts at another institution called First Republic Bank which uh in 2023 had collapsed and was taken over by JP Morgan and that included two of his accounts. So, initially they had moved to close those two accounts with one of their anti-moneyaundering executives telling the court due to his earlier uh conviction. Once this lawsuit was sort of, you know, underway and he moved for a temporary restraining order to stop them from closing those accounts, JP Morgan kind of reversed itself and they made the decision. They told us that they looked at, you know, that appeal that he was successful on with some of the the criminal accounts. They also looked at it had been 15 years to them that this time had gone by without any other sort of criminal allegation against him. And so, they're going to keep those accounts open. So, you're also seeing it here at this level in the litigation. >> Did Brody ever get an American Express card? uh unclear at the moment, but in terms of his matter, you know, his company, Brody Capital, it's an investment firm and the company had an American Express card, you know, was under his operations manager's name. He wanted one for himself and that's what sort of sparked all this when they denied him. And, you know, at the moment, this is still in litigation. In fact, there's a, you know, a hearing this week in the matter and on American Express's end, they are telling the judge that they need to dismiss this case because these card member agreements, account agreements, usually require that disputes be handled in arbitration. >> And from the bank's point of view, explain why they might not want to extend credit to someone who was convicted of a crime, especially financial crimes. >> Right. And well, it's really a liability issue for the banks that they're making these assessments. They have to comply under the law. You know that the people who they're giving access to the US financial system to are not going to be using it for illicit purposes. Um, so you have it twofold. One, if someone's a fraudster, the bank itself could later be sued by victims claiming that they didn't do enough. They can also be penalized by the government for not abiding by all the rules and regulations to ensure that we have uh, you know, a safe banking system. So if somebody has some type of financial crime on their record, that's going to be looked at very closely by the bank. You know, in terms of how uh aggressive they are in this space, talking to a number of defense lawyers, a lot of times people lose their banking even at the first sign of an investigation, let alone a conviction. So, you know, it's quite common for a bank to receive a subpoena even for records of somebody, you know, related to a case and immediately cut off an account. So, someone might learn they're under investigation just by losing access to their banking. It's it's kind of a large wave in terms of, you know, investigation and losing banking. >> It's really been a fascinating conversation. Thanks so much, Tom. That's Tom Shoenberg, Bloomberg senior reporter. The Trump administration got some serious push back from a panel of Ninth Circuit Appallet judges during oral arguments over the administration's deployment of thousands of California National Guard troops to Los Angeles in June. San Francisco federal judge Charles Brier had ruled in September that Trump's deployment violated the Posi Kamatus Act, a 19th century law that bars using the military for civilian law enforcement. The Trump administration appealed and Judge Eric Miller was one of the appallet judges who sounded skeptical that the protests were violent riots that created an exception to posit. He questioned the justice department's attorney Eric MacArthur about the extent of the protests. Why is, you know, a couple of hundred people engaging in disorderly conduct and throwing things at a building over the course of two days uh of comparable severity to an invasion or a rebellion. >> Well, because violence is being used to thwart enforcement of federal law. And I don't >> but but violence is used to thwart enforcement of federal law all the time. Well, >> right. I mean like they the the FBI goes to arrest somebody and he you know shoots at them or tries to run away and uh that happens every day. Right. >> Right. >> On the same day the oral arguments took place Wednesday the full 9th circuit declined to rehear on bank meaning the full court another decision allowing Trump's federalization of the California National Guard. If it sounds confusing that's because it is. And here to help us sort it out is Joshua Castenberg, a professor at the University of New Mexico Law School and a former judge in the US Air Force. Josh, let's start with the oral arguments over the Posi Kamatus Act. One of the things the Trump administration argued was that the president has unreable power when it comes to deploying the National Guard. One of the things that the administration is arguing is that if you go back to the beginning of the country and you look at this case called Martin versus Mott which the Supreme Court ruled on in 1827 coming out of the War of 1812. It just took a while for that issue to percolate up to the court. That the president's authority to declare something an emergency is non-reable by the courts. that that's what the administration's position is. California's position, New York's position, Illinois position is that's not true. That the president is commanderin-chief and the commander-in-chief's orders to his or her troops may be nonreable by the courts, but the actual declaration of a an emergency or the use of those troops is clearly reviewable by the courts. So, those are two different things. and and that's central to what the Ninth Circuit is trying to rule on right now. >> And so did it seem like the judges were skeptical about the government's argument that they couldn't review it? >> Well, I believe they are. I mean, when you say government, there there are several governments fighting each other in the court. >> True. True. The let's say the Trump administration. >> Yeah. I I think the judges are skeptical about that. To me, it goes back to the Youngstown sheet and tube versus Sawyer decision in the last days of the Harry Truman administration when Truman tried to make a similar argument. And the thing is, you know, I go back to one of the things that William O. Douglas mentioned in his concurrence in that plurality which is if a president is free to declare anything as an emergency so to a bridge the basic rights of the people then all we'll have in the future is government by emergency that it'll just be the idea of a president the laws in the way the peaceime laws are in the way so to avoid dealing with the courts I'm just going to declare things are an emergency and I think the Ninth Circuit is skeptical of that argument as they should be because you know the courts and the country as a whole have already been warned that that argument is is a non-starter when it comes to domestic issues. >> Another issue was whether Trump had violated the posi commitatus act. So, the White House had framed the protest as violent riots, but yes, Judge Eric Miller, a Trump appointee, asked why a few hundred people engaging in disorderly conduct over two days was comparable to an invasion or a rebellion. And he pushed the Trump administration lawyer on that. >> Yeah. You know, as he should be skeptical. I mean, a a riot, an insurrection, a rebellion, none of them have, you know, really true tight legal definitions. I look at a rebellion and I look at South Carolina militia firing on Fort Sumpter in 1861. That's clear that that's a rebellion. Politicians have called things rebellions before that are far short of a rebellion or an insurrection. In World War I, there was a group of farmers in Oklahoma who thought they could march on Washington DC to prevent the draft from occurring. They called it the Green Corn Rebellion. It's really just about a thousand farmers. It wasn't a rebellion at all. And most of them didn't make it out of state. So, a rebellion or an insurrection is something that either threatens to topple the government or completely prevents the government from fulfilling its its functions, whether that's a federal or a state government. And that's not at play here. You do have people breaking the law. You also have the majority of people simply exercising their constitutional rights of freedom of speech and freedom of assembly. And if a president can call that a rebellion, an insurrection or an uncontrollable riot, we'll never hear the end of that. That will be used to crush disscent. So I think where the Trump appointee, the judge is coming down on, and it's something I think we should all take to heart is this is not a case about whether or not the president can use law enforcement. This is a case about whether the president can use the military as law enforcement and and that's what the posi commatatus law was drafted to prevent. In 1877 the posi commatatus act comes into being partly as um southern demands to end reconstruction uh southern demands to prohibit the use of the army to enforce civil rights. kind of as a sorted beginning, but also it was a reflection on what the framers of the Constitution feared, which was a standing army being used to police the people to coersse how they vote and who would remain in office and who remains in power and the like. Until Donald Trump, the only president that acted in a manner that I would say was heavyhanded was Grover Cleveland. And Grover Cleveland, though, at least he had a US District Court injunction on his side during the Pullman strikes, you know, in the Midwest in 1895. There was a widescale labor strike. There were anarchists who were a part of that strike, although most of them were simply following Eugene Debs, who later ran for president. But the strikers were preventing the male from going on trains. And so that's what Grover Cleveland and his attorney general Richard latched on to when using the army to suppress the strike. But again, they had gone to the courts first and gotten permission. Here you have the president acting as though the courts don't matter, as though the courts are not a co-equal branch of government and he can use the military for anything he wants and it's nonreable. And I I think that's where the skepticism comes in from the Trump appointing. But there's one other thing I'd point out. No one is opposing the president enlarging the FBI. No one's opposing the president enlarging ICE or any other federal police force. But the fundamental difference between the FBI or ICE or any other federal police force on the one side and the military on the other is that the president of the United States is not the commander and chief of the FBI. He's still the chief executive. And the FBI is much more free to question a president's orders and to say the heck with this and walk off their job than the military. And when a soldier, sailor, airman, or marine gets an order from the president, that soldier, sailor, airman, and marine operates under a separate legal system, the uniform code of military justice. And it is the only legal system in the United States, which places a burden of proof on the defendant to prove that a presidential order is unlawful rather than the government having to prove that the order is lawful. So the presumption of everyone in uniform is the president orders me to do this. I have no choice but to do if I don't I may end up with a dishonorable discharge and a long sentence in a military prison. And I think that smart judges understand that distinction and that's why the posi commatatus act is so important as well as the framers of the constitution and their division of power you know and checks and balances and the fear of standing armies. >> I mean there are so many seemingly conflicting opinions out there on Trump sending troops in. So on Wednesday, the full Ninth Circuit declined to hear Nuome versus Trump on Bankank, meaning by a full court bench. And so that basically upholds the ruling that permits Trump to maintain federal authority over California National Guard troops that were deployed in Los Angeles during the protest. At the same time, you had these oral arguments also at the Ninth Circuit over whether Trump's deployment of the troops to LA violated the Posi Commamatus Act, though that seems to be on its face a conflict. Explain why it isn't. >> That's a great question. So, this is what's going on. No member of the bench on the one hand want to prevent the president from having the authority to federalize the guard. There would be no desire for example if China were to invade an ally or Russia were to invade an ally that the court should be called to intervene on a presidential callup. No one wants to spend time in the courts if there's a real no kidding real national emergency where the president would have to call up the guard. Say a massive earthquake or typhoon disrupts and disables the eastern seabboard or California. So there's a reluctance to intervene in the president calling up the guard, but it's what the president does when the guard is called into federal service or using active duty forces, particularly the army, which that's what the Posi Kamatus act covers. This doesn't cover the Marine Corps. There's a fundamental difference between that, what the president does with the military versus calling up. And I think that's what part of the confusion is with these myriad of cases. The other has to do with whether or not a temporary restraining order should stay in effect or not. And just keep in mind that a president or any party may lose on a temporary restraining order but then win later on on the substantive issue or vice versa. And so you get all these sort of convoluted, you know, decisions. What is the standard? What is the question being raised under the standard? And to the general public who isn't trained in the law, it looks like the court is seessawing between various things and making no sense. But that that's really not what's going on. It's that there are these nuance questions >> coming up next. But what about the conflicting opinions from the Ninth and Seventh Circuits? One allowing Trump to send troops into Portland, Oregon. The other barring Trump from sending troops to Chicago, Illinois. You're listening to Bloomberg. President Trump's push to send the military into Democraticrun cities despite fierce opposition from state and local leaders has unleashed a whirlwind of lawsuits and overlapping court rulings. Some just seem to be contradictory. Others are contradictory. I've been talking to Professor Joshua Castenberg of the University of New Mexico Law School. Even for those of us who know, does it seem like courts are coming down with different decisions? Because you had the seventh circuit. >> Yeah. >> Saying that no, you can't send troops into Chicago, Illinois. And then you had the Ninth Circuit panel with two Trump appointees saying you can send them into Portland. You know, the facts were slightly different, but not that different. >> You know, it's actually what you say is a is a great point. um two different federal circuits ruling differently on similar issues is not unheard of and generally that's what gets a case into the Supreme Court circuit splits. I'm not a big fan on, you know, this is an Obama judge, this is a Trump judge versus a Biden or a Bush judge. Although I will say there's a couple of judges that Donald Trump appointed that to me are clearly partisan towards him. But those judges are not in the seventh or ninth circuit that I'm thinking about. So they're not really playing a role in this at all. What strikes me is the question of how much deference should a president have on military affairs is key to this. There has been an un in my opinion an unfortunate doctrine called the military deference doctrine. You don't find it stated clearly by the Supreme Court anywhere, but it exists. That goes back to the turn of the last century, at least to the SpanishAmerican War, if not World War I, where the courts give the president greater deference in military matters than they do on anything else. And there are judges who don't like the deference doctrine. And there are judges who seem to just acquies to the deference doctrine. And I think that's where some of this difference is. >> The Illinois case is before the Supreme Court. >> Yeah. >> And does it seem likely on a temporary basis that they'll allow Trump to send troops in? >> I can't predict what the court will do. I could only tell you what I would hope the court would do, but I can't predict what the court will do. They couldn't guess everything President Trump will do. That they can't guess that. But they sure as heck could have seen this coming when they issued Trump versus United States because now you have a president who can test the boundaries in a way that no other president did in peace time before him and thinking what's the worst that can happen? It's an official presidential act. >> I think most of us are still questioning that case and how it came out that way and the chief justice's opinion. >> Yeah. Well, as a legal historian, you know, and there there can be differences of opinion. What I would say about this, just like Fitzgerald versus Nixon in 19 um 80 and just like, you know, Dasheney versus um you know, which is the judicial immunity case. None of that is required by the Constitution. What they basically did was shield the judicial branch and the executive branch from having to deal with the normal day-to-day operations of the law that you and I and everyone else have to deal with. And I I go back to Byron White's dissent on on the Fitzgerald case. Um, to me, Nixon versus Fitzgerald and Trump versus United States are the majority showed a disregard and a distrust of the very rule of law that in their speeches every day they encourage us to embrace. I try to be soft tonged and um objective when we talk about these things. very difficult to be because if there's one thing that the far right and the far left and everybody in between should agree on and embrace in the law, it's that John Adams and Thomas Jefferson, Alexander Hamilton, all these so-called bright men who created the Constitution and those we don't know of who voted to ratify it did so with the understanding that military authority would only exist on the borders of this country that it would never be used um in the manner that it's being used now and that we would never have another Oliver Cromwell come onto our shores and we would stop it before it began. Josh, I understand that one of the law review articles you've written was quoted from extensively by the dissenting judge in the Ninth Circuit's opinion turning down an review of the decision allowing President Trump's federalization of the California National Guard. So tell us a little about it. So there's been a lot of discussion about this decision from the Supreme Court called Martin versus Mott and it's from 1827. And what the government has increasingly used it to argue from is this idea that the president's decisions and on national security are immune from judicial review. And the problem with Martin versus Mott is that its legal history doesn't say that at all. it it just focused on what the relationship is between a national guardsman, but in those days they called it a militia troop um and and the president. It has nothing to do with presidential authority um at all over the people of this country or over the laws. And I point that out that when Martin versus Mott was decided, the judicial oversight of the military was quite robust. I mean, it went through the New York state court system. You can't challenge military orders in state courts anymore. That ended after the Civil War. And so, Martin versus Mott does not carry with it any of the strength that the Trump administration believes that it does. And my article was published in the Louisiana State University Law Review back in um 2021. I wasn't thinking of this issue at all when I published it. I was thinking of something else when I published the legal history article on it, but um I'm happy that it's seeing some use now. >> Well, congratulations on getting cited in a Ninth Circuit decision and thanks for the discussion today. That's Professor Joshua Castenberg of the University of New Mexico Law School. And that's it for this edition of the Bloomberg Law Show. Remember, you can always get the latest legal news on our Bloomberg Law podcast. You can find them on Apple Podcast, Spotify, and at www.bloomberg.com/mpodcast/law. And remember to tune in to the Bloomberg Law Show every week night at 1000 p.m. Wall Street time. I'm June Graasso and you're listening to Bloomberg. [Music]
Trump May Pardon You, But The Bank May Not | Bloomberg Law
Summary
Transcript
This is Bloomberg Law with June Graasso from Bloomberg Radio. >> On the first day of his second term, President Donald Trump granted full pardons or commutations to the more than 1,500 people convicted or charged in the January 6th riots at the US capital four years ago. >> So this is January 6th. Yeah, these are the hostages. Approximately 1,500 for a pardon. >> Yes, >> full pardon. >> That was just the beginning of what has been something of a pardoning spree for Trump. Today was the convicted founder of the crypto exchange Binance, Xiaoang Xiao. Last week, it was convicted former Republican Congressman George Santos. But it's one thing to be cleared by the president. It's another to be cleared by the banks. And some of the people pardoned during Trump's first term found that out when they were debanked. Joining me is Bloomberg senior reporter Tom Shoenberg. Tom, Republican fundraiser Elliot Brody, who was convicted for violating a lobbying law, and former CFO of social media company X, Mahmud Razabanki, who was convicted of making false statements were both pardoned at the end of Trump's first term. But explain how those White House reprieves only go so far. >> So both, you know, Mr. Brody and Mr. Banky kind of recently within the you know last year or so sought banking services. Both had applied you know for credit. Brody from American Express, Bonnke from JP Morgan, and were denied. And as they pushed for explanation as to why in both instances were told that it was due to a criminal record that they had had, you know, that was tied to the pardon that they received from President Trump in his first term with Banka. That also meant he had applied for a credit card with Bank of America and a 529 account that involved a fidelity and the same situation. He was denied accounts or denied access to credit. >> Is there really a term debanked? There is now um there is now and it's a good question because when I was uh interviewing people for the article uh including Liz Oyer who is former pardon attorney at the justice department she asked well what is debanking because you know until recently it wasn't it wasn't really a term but it is now and is also used in uh both these lawsuits that were brought by Mr. Broady and Mr. Banky. Is a pardon meant to erase the legal conviction on your record or is it meant to wipe the slate clean? >> Really in terms of how it's been interpreted really is erases that legal stain of the conviction, right? And I think in terms of financial services, what these cases are sort of raising to an extent is does that necessarily override these risk assessments of private lenders that are required under law to prevent against money laundering and to know their customer which usually is a look back on their history both financial but also criminal history. >> When you get a pardon, is your criminal record expuned or is there sort of a big red stamp on it? You know, pardon? So if you if you go to the criminal dockets, you would see their note that the case was dismissed or you would see that pardon in there in some fashion. So for Mr. Brody, he had pleaded guilty to account of conspiring to violate the Foreign Agents Registration Act in October 2020, but he had yet to be sentenced when President Trump pardoned him. So what you see in his record is you see that his attorneys moved to dismiss the case because of that which then happened. So it's logged there. In terms of Mr. Abanki, you know, he was uh convicted way back in 2010 of multiple crimes tied to Iranian sanctions and on appeal, two of those counts were thrown out. So he had one sort of remaining conviction when he was pardoned for uh false statements to investigators. So, in terms of Banky, when you pull up sort of say the press release from the Manhattan US Attorney's Office, at the top, you will see an update on there in red. So, the press release stays laying out, you know, extensively what he was convicted of by a jury. But at the top in red, it says, you know, update and it notes both the appellet and then it says, you know, he received a presidential pardon for the fourth conviction. So the record remains and you can also pull up those cases and you can look at transcripts and see you know in the case of Mr. Brody what he said to the judge at the time when he was pleading guilty. >> Who is representing Boydy and Banky? >> Yeah. So they're they're represented by a firm called Sher Jaffy. It's a boutique firm here in Washington DC. They've really done a lot of work on sort of political conservative causes. They've brought cases on behalf of uh America First Legal, which is uh an advocacy group that was co-founded by current White House Deputy Chief of Staff Steven Miller. They've also did a lot on behalf of Elon Musk some years ago when he said he would have legal representation for people that may have been penalized for uh what they've said on his uh social media network, Twitter and then X. And so they famously kind of represented a Disney actress who had lost her job because some postings online. Those are just a a flavor of some of the cases that they've they've brought. >> Some MAGA people think that conservatives are being debanked for their political beliefs and you write that it's become an obsession with some including President Trump. >> Yes. I mean, President Trump or the Trump Organization has sued Capital One Financial Core making accusations that they had improperly kind of closed hundreds of accounts that the Trump Organization had and Capital One denied any sort of wrongdoing here. They moved to have the case dismissed. You know, that's in front of a judge right now. And you know the argument on their end is that they had the right to cancel accounts based on sort of the contracts that they had for those accounts. You know it's been a personal issue for the president. Additionally, in August, he issued an executive order directly at this issue um called guaranteeing fair banking for all Americans in which he sort of calls out the quote unquote debanking of, you know, specifically conservatives and others for, you know, whether political or religious reasons and orders financial regulators to remove some of the, you know, standards they had in reviewing accounts at institutions as well as kind of looking back and see whether any people's accounts had been closed due to whether political, religious reasons or some other sort of unfair determination. So that's ongoing right now. >> I mean is there any evidence that banks are are targeting specifically targeting conservatives because of their political views? After January 6th, there were a lot of sort of stories uh coming out. You know, there was a lot of concern that people were losing their accounts in some way. I mean, banks have a lot of leeway in terms of deciding whether to uh close an account. They kind of use this term reputational risk. That's kind of a catchall when sort of making those determinations. And that also includes sort of looking at, you know, news media accounts involving people. that's one thing they look at. And so I've seen it on sort of both ends. I mean, I think on the Democratic side, Elizabeth Warren and others have also been very vocal about claiming that certain Americans were losing their banking, specifically Muslim Americans, you know. So, it has been on on both sides of the political aisle. >> Since the executive order, have banks been making changes? Some got out ahead of that. You know, JP Morgan, you know, beginning even after the election last year had started making changes, you know, both in public materials and then in their own policies, specifically noting that that it would not, you know, base decision-m on accounts on religious or political views. So, you're seeing it there. You're even seeing it in terms of these cases. Mr. Boni, you know, one of the things that happened after he brought his case over not receiving credit from uh JP Morgan is it happened that he had two accounts at another institution called First Republic Bank which uh in 2023 had collapsed and was taken over by JP Morgan and that included two of his accounts. So, initially they had moved to close those two accounts with one of their anti-moneyaundering executives telling the court due to his earlier uh conviction. Once this lawsuit was sort of, you know, underway and he moved for a temporary restraining order to stop them from closing those accounts, JP Morgan kind of reversed itself and they made the decision. They told us that they looked at, you know, that appeal that he was successful on with some of the the criminal accounts. They also looked at it had been 15 years to them that this time had gone by without any other sort of criminal allegation against him. And so, they're going to keep those accounts open. So, you're also seeing it here at this level in the litigation. >> Did Brody ever get an American Express card? uh unclear at the moment, but in terms of his matter, you know, his company, Brody Capital, it's an investment firm and the company had an American Express card, you know, was under his operations manager's name. He wanted one for himself and that's what sort of sparked all this when they denied him. And, you know, at the moment, this is still in litigation. In fact, there's a, you know, a hearing this week in the matter and on American Express's end, they are telling the judge that they need to dismiss this case because these card member agreements, account agreements, usually require that disputes be handled in arbitration. >> And from the bank's point of view, explain why they might not want to extend credit to someone who was convicted of a crime, especially financial crimes. >> Right. And well, it's really a liability issue for the banks that they're making these assessments. They have to comply under the law. You know that the people who they're giving access to the US financial system to are not going to be using it for illicit purposes. Um, so you have it twofold. One, if someone's a fraudster, the bank itself could later be sued by victims claiming that they didn't do enough. They can also be penalized by the government for not abiding by all the rules and regulations to ensure that we have uh, you know, a safe banking system. So if somebody has some type of financial crime on their record, that's going to be looked at very closely by the bank. You know, in terms of how uh aggressive they are in this space, talking to a number of defense lawyers, a lot of times people lose their banking even at the first sign of an investigation, let alone a conviction. So, you know, it's quite common for a bank to receive a subpoena even for records of somebody, you know, related to a case and immediately cut off an account. So, someone might learn they're under investigation just by losing access to their banking. It's it's kind of a large wave in terms of, you know, investigation and losing banking. >> It's really been a fascinating conversation. Thanks so much, Tom. That's Tom Shoenberg, Bloomberg senior reporter. The Trump administration got some serious push back from a panel of Ninth Circuit Appallet judges during oral arguments over the administration's deployment of thousands of California National Guard troops to Los Angeles in June. San Francisco federal judge Charles Brier had ruled in September that Trump's deployment violated the Posi Kamatus Act, a 19th century law that bars using the military for civilian law enforcement. The Trump administration appealed and Judge Eric Miller was one of the appallet judges who sounded skeptical that the protests were violent riots that created an exception to posit. He questioned the justice department's attorney Eric MacArthur about the extent of the protests. Why is, you know, a couple of hundred people engaging in disorderly conduct and throwing things at a building over the course of two days uh of comparable severity to an invasion or a rebellion. >> Well, because violence is being used to thwart enforcement of federal law. And I don't >> but but violence is used to thwart enforcement of federal law all the time. Well, >> right. I mean like they the the FBI goes to arrest somebody and he you know shoots at them or tries to run away and uh that happens every day. Right. >> Right. >> On the same day the oral arguments took place Wednesday the full 9th circuit declined to rehear on bank meaning the full court another decision allowing Trump's federalization of the California National Guard. If it sounds confusing that's because it is. And here to help us sort it out is Joshua Castenberg, a professor at the University of New Mexico Law School and a former judge in the US Air Force. Josh, let's start with the oral arguments over the Posi Kamatus Act. One of the things the Trump administration argued was that the president has unreable power when it comes to deploying the National Guard. One of the things that the administration is arguing is that if you go back to the beginning of the country and you look at this case called Martin versus Mott which the Supreme Court ruled on in 1827 coming out of the War of 1812. It just took a while for that issue to percolate up to the court. That the president's authority to declare something an emergency is non-reable by the courts. that that's what the administration's position is. California's position, New York's position, Illinois position is that's not true. That the president is commanderin-chief and the commander-in-chief's orders to his or her troops may be nonreable by the courts, but the actual declaration of a an emergency or the use of those troops is clearly reviewable by the courts. So, those are two different things. and and that's central to what the Ninth Circuit is trying to rule on right now. >> And so did it seem like the judges were skeptical about the government's argument that they couldn't review it? >> Well, I believe they are. I mean, when you say government, there there are several governments fighting each other in the court. >> True. True. The let's say the Trump administration. >> Yeah. I I think the judges are skeptical about that. To me, it goes back to the Youngstown sheet and tube versus Sawyer decision in the last days of the Harry Truman administration when Truman tried to make a similar argument. And the thing is, you know, I go back to one of the things that William O. Douglas mentioned in his concurrence in that plurality which is if a president is free to declare anything as an emergency so to a bridge the basic rights of the people then all we'll have in the future is government by emergency that it'll just be the idea of a president the laws in the way the peaceime laws are in the way so to avoid dealing with the courts I'm just going to declare things are an emergency and I think the Ninth Circuit is skeptical of that argument as they should be because you know the courts and the country as a whole have already been warned that that argument is is a non-starter when it comes to domestic issues. >> Another issue was whether Trump had violated the posi commitatus act. So, the White House had framed the protest as violent riots, but yes, Judge Eric Miller, a Trump appointee, asked why a few hundred people engaging in disorderly conduct over two days was comparable to an invasion or a rebellion. And he pushed the Trump administration lawyer on that. >> Yeah. You know, as he should be skeptical. I mean, a a riot, an insurrection, a rebellion, none of them have, you know, really true tight legal definitions. I look at a rebellion and I look at South Carolina militia firing on Fort Sumpter in 1861. That's clear that that's a rebellion. Politicians have called things rebellions before that are far short of a rebellion or an insurrection. In World War I, there was a group of farmers in Oklahoma who thought they could march on Washington DC to prevent the draft from occurring. They called it the Green Corn Rebellion. It's really just about a thousand farmers. It wasn't a rebellion at all. And most of them didn't make it out of state. So, a rebellion or an insurrection is something that either threatens to topple the government or completely prevents the government from fulfilling its its functions, whether that's a federal or a state government. And that's not at play here. You do have people breaking the law. You also have the majority of people simply exercising their constitutional rights of freedom of speech and freedom of assembly. And if a president can call that a rebellion, an insurrection or an uncontrollable riot, we'll never hear the end of that. That will be used to crush disscent. So I think where the Trump appointee, the judge is coming down on, and it's something I think we should all take to heart is this is not a case about whether or not the president can use law enforcement. This is a case about whether the president can use the military as law enforcement and and that's what the posi commatatus law was drafted to prevent. In 1877 the posi commatatus act comes into being partly as um southern demands to end reconstruction uh southern demands to prohibit the use of the army to enforce civil rights. kind of as a sorted beginning, but also it was a reflection on what the framers of the Constitution feared, which was a standing army being used to police the people to coersse how they vote and who would remain in office and who remains in power and the like. Until Donald Trump, the only president that acted in a manner that I would say was heavyhanded was Grover Cleveland. And Grover Cleveland, though, at least he had a US District Court injunction on his side during the Pullman strikes, you know, in the Midwest in 1895. There was a widescale labor strike. There were anarchists who were a part of that strike, although most of them were simply following Eugene Debs, who later ran for president. But the strikers were preventing the male from going on trains. And so that's what Grover Cleveland and his attorney general Richard latched on to when using the army to suppress the strike. But again, they had gone to the courts first and gotten permission. Here you have the president acting as though the courts don't matter, as though the courts are not a co-equal branch of government and he can use the military for anything he wants and it's nonreable. And I I think that's where the skepticism comes in from the Trump appointing. But there's one other thing I'd point out. No one is opposing the president enlarging the FBI. No one's opposing the president enlarging ICE or any other federal police force. But the fundamental difference between the FBI or ICE or any other federal police force on the one side and the military on the other is that the president of the United States is not the commander and chief of the FBI. He's still the chief executive. And the FBI is much more free to question a president's orders and to say the heck with this and walk off their job than the military. And when a soldier, sailor, airman, or marine gets an order from the president, that soldier, sailor, airman, and marine operates under a separate legal system, the uniform code of military justice. And it is the only legal system in the United States, which places a burden of proof on the defendant to prove that a presidential order is unlawful rather than the government having to prove that the order is lawful. So the presumption of everyone in uniform is the president orders me to do this. I have no choice but to do if I don't I may end up with a dishonorable discharge and a long sentence in a military prison. And I think that smart judges understand that distinction and that's why the posi commatatus act is so important as well as the framers of the constitution and their division of power you know and checks and balances and the fear of standing armies. >> I mean there are so many seemingly conflicting opinions out there on Trump sending troops in. So on Wednesday, the full Ninth Circuit declined to hear Nuome versus Trump on Bankank, meaning by a full court bench. And so that basically upholds the ruling that permits Trump to maintain federal authority over California National Guard troops that were deployed in Los Angeles during the protest. At the same time, you had these oral arguments also at the Ninth Circuit over whether Trump's deployment of the troops to LA violated the Posi Commamatus Act, though that seems to be on its face a conflict. Explain why it isn't. >> That's a great question. So, this is what's going on. No member of the bench on the one hand want to prevent the president from having the authority to federalize the guard. There would be no desire for example if China were to invade an ally or Russia were to invade an ally that the court should be called to intervene on a presidential callup. No one wants to spend time in the courts if there's a real no kidding real national emergency where the president would have to call up the guard. Say a massive earthquake or typhoon disrupts and disables the eastern seabboard or California. So there's a reluctance to intervene in the president calling up the guard, but it's what the president does when the guard is called into federal service or using active duty forces, particularly the army, which that's what the Posi Kamatus act covers. This doesn't cover the Marine Corps. There's a fundamental difference between that, what the president does with the military versus calling up. And I think that's what part of the confusion is with these myriad of cases. The other has to do with whether or not a temporary restraining order should stay in effect or not. And just keep in mind that a president or any party may lose on a temporary restraining order but then win later on on the substantive issue or vice versa. And so you get all these sort of convoluted, you know, decisions. What is the standard? What is the question being raised under the standard? And to the general public who isn't trained in the law, it looks like the court is seessawing between various things and making no sense. But that that's really not what's going on. It's that there are these nuance questions >> coming up next. But what about the conflicting opinions from the Ninth and Seventh Circuits? One allowing Trump to send troops into Portland, Oregon. The other barring Trump from sending troops to Chicago, Illinois. You're listening to Bloomberg. President Trump's push to send the military into Democraticrun cities despite fierce opposition from state and local leaders has unleashed a whirlwind of lawsuits and overlapping court rulings. Some just seem to be contradictory. Others are contradictory. I've been talking to Professor Joshua Castenberg of the University of New Mexico Law School. Even for those of us who know, does it seem like courts are coming down with different decisions? Because you had the seventh circuit. >> Yeah. >> Saying that no, you can't send troops into Chicago, Illinois. And then you had the Ninth Circuit panel with two Trump appointees saying you can send them into Portland. You know, the facts were slightly different, but not that different. >> You know, it's actually what you say is a is a great point. um two different federal circuits ruling differently on similar issues is not unheard of and generally that's what gets a case into the Supreme Court circuit splits. I'm not a big fan on, you know, this is an Obama judge, this is a Trump judge versus a Biden or a Bush judge. Although I will say there's a couple of judges that Donald Trump appointed that to me are clearly partisan towards him. But those judges are not in the seventh or ninth circuit that I'm thinking about. So they're not really playing a role in this at all. What strikes me is the question of how much deference should a president have on military affairs is key to this. There has been an un in my opinion an unfortunate doctrine called the military deference doctrine. You don't find it stated clearly by the Supreme Court anywhere, but it exists. That goes back to the turn of the last century, at least to the SpanishAmerican War, if not World War I, where the courts give the president greater deference in military matters than they do on anything else. And there are judges who don't like the deference doctrine. And there are judges who seem to just acquies to the deference doctrine. And I think that's where some of this difference is. >> The Illinois case is before the Supreme Court. >> Yeah. >> And does it seem likely on a temporary basis that they'll allow Trump to send troops in? >> I can't predict what the court will do. I could only tell you what I would hope the court would do, but I can't predict what the court will do. They couldn't guess everything President Trump will do. That they can't guess that. But they sure as heck could have seen this coming when they issued Trump versus United States because now you have a president who can test the boundaries in a way that no other president did in peace time before him and thinking what's the worst that can happen? It's an official presidential act. >> I think most of us are still questioning that case and how it came out that way and the chief justice's opinion. >> Yeah. Well, as a legal historian, you know, and there there can be differences of opinion. What I would say about this, just like Fitzgerald versus Nixon in 19 um 80 and just like, you know, Dasheney versus um you know, which is the judicial immunity case. None of that is required by the Constitution. What they basically did was shield the judicial branch and the executive branch from having to deal with the normal day-to-day operations of the law that you and I and everyone else have to deal with. And I I go back to Byron White's dissent on on the Fitzgerald case. Um, to me, Nixon versus Fitzgerald and Trump versus United States are the majority showed a disregard and a distrust of the very rule of law that in their speeches every day they encourage us to embrace. I try to be soft tonged and um objective when we talk about these things. very difficult to be because if there's one thing that the far right and the far left and everybody in between should agree on and embrace in the law, it's that John Adams and Thomas Jefferson, Alexander Hamilton, all these so-called bright men who created the Constitution and those we don't know of who voted to ratify it did so with the understanding that military authority would only exist on the borders of this country that it would never be used um in the manner that it's being used now and that we would never have another Oliver Cromwell come onto our shores and we would stop it before it began. Josh, I understand that one of the law review articles you've written was quoted from extensively by the dissenting judge in the Ninth Circuit's opinion turning down an review of the decision allowing President Trump's federalization of the California National Guard. So tell us a little about it. So there's been a lot of discussion about this decision from the Supreme Court called Martin versus Mott and it's from 1827. And what the government has increasingly used it to argue from is this idea that the president's decisions and on national security are immune from judicial review. And the problem with Martin versus Mott is that its legal history doesn't say that at all. it it just focused on what the relationship is between a national guardsman, but in those days they called it a militia troop um and and the president. It has nothing to do with presidential authority um at all over the people of this country or over the laws. And I point that out that when Martin versus Mott was decided, the judicial oversight of the military was quite robust. I mean, it went through the New York state court system. You can't challenge military orders in state courts anymore. That ended after the Civil War. And so, Martin versus Mott does not carry with it any of the strength that the Trump administration believes that it does. And my article was published in the Louisiana State University Law Review back in um 2021. I wasn't thinking of this issue at all when I published it. I was thinking of something else when I published the legal history article on it, but um I'm happy that it's seeing some use now. >> Well, congratulations on getting cited in a Ninth Circuit decision and thanks for the discussion today. That's Professor Joshua Castenberg of the University of New Mexico Law School. And that's it for this edition of the Bloomberg Law Show. Remember, you can always get the latest legal news on our Bloomberg Law podcast. You can find them on Apple Podcast, Spotify, and at www.bloomberg.com/mpodcast/law. And remember to tune in to the Bloomberg Law Show every week night at 1000 p.m. Wall Street time. I'm June Graasso and you're listening to Bloomberg. [Music]