Trump Fires Preet Bharara, The Sheriff of Wall Street
From the “Sheriff of Wall Street” to the man whose anti-corruption crusade put “Albany on Trial,” Preet Bharara has earned many nicknames during his uncommonly long tenure as U.S. attorney for the Southern District of New York. As one of the rare federal prosecutors invited by President-elect Donald Trump to remain in office, Bharara is poised to see his legacy evolve again.
Bharara’s office declined to comment on this story, but a onetime federal judge who presided over several of Bharara’s cases noted in an interview just how unusual this development is.
“I am surprised because typically, when a new president comes in, all of the U.S. attorneys in the country resign,” said Shira Scheindlin, now in private practice at Stroock & Stroock & Lavan. “It’s just the standard protocol. They all resign, and then generally, the incoming president does ask a few to stay. But mostly, they’re replaced. And that’s sort of the way politics is.”
If Bharara stays on through Trump’s first term, he will become the longest-running U.S. attorney that the Southern District of New York has ever had.
After meeting the president-elect in Trump Tower after the election, Bharara voiced a theory as to why Trump let him say on. “Presumably because he’s a New Yorker, and is aware of all this office has done over the past seven years,” Bharara said.
But leading figures in New York’s legal community have found that explanation incomplete.
“He says, ‘I’m kept on because I’m so good,’” Scheindlin said in a phone interview. “I understand that, but there have been many other good U.S. attorneys during the years who have not been kept on. So, I’m sure Mr. Trump had his reasons, but I can’t divine them.”
Scheindlin, who herself is working on a project opposing Trump’s immigration agenda, noted that one has only to remember the prosecutors who investigated President Richard Nixon if they think Bharara could parlay his work against corruption and white-collar crime in New York City into meaningful check on the Oval Office.
The Man is Busting Wall St
On the same morning of his Nov. 30 meeting with Bharara, Trump vowed to settle concerns of interest conflicts by leaving his business “in total.” But the president-elect has since backpedaled from that position several times, leaving a role for his children to operate his organization while he continues to profit from it in a so-called “half-blind” trust.
With all the hallmarks of a burgeoning kleptocracy in motion, Trump’s brand scored a public-relations coup by keeping an anti-corruption watchdog like Bharara at the Department of Justice.
Bharara opened up his insider investigation into the Galleon Group, then-headed by billionaire Raj Rajaratnam, shortly after President Barack Obama appointed him in 2009. The probe netted more than 60 indictments – followed by a wave of convictions – against the fund’s executives.
Major networks like ABC and CBS dubbed Bharara the “Sheriff of Wall Street.” Time magazine ran Bharara’s face on the cover, declaring “This Man Is Busting Wall Street.”
The prosecutor’s aura of invincibility withstood even the fact that criminal prosecution eluded each of the major banks behind the 2008 mortgage fraud crisis that tanked the global economy.
Attorney General Eric Holder took most of the heat for this, accused of treating some CEOs as too big to jail. The name “Preet” meanwhile became media shorthand for aggressive prosecution, a reputation that grew as Bharara set his sights on New York’s most powerful legislators: then-Assembly Speaker Sheldon Silver and then-Senate Majority Leader Dean Skelos.
As those cases churned, Bharara got a silver-screen treatment in the Showtime series “Billions,” in which actor Paul Giamatti plays a fierce prosecutor modeled after him.
Meanwhile appellate court decisions have threatened to chip away at some of his accomplishments. The Second Circuit narrowed the definition of insider trading in the case of United States v. Newman, and it remains to be seen how the Supreme Court’s exoneration of former Virginia Gov. Robert McDonnell will affect Bharara’s political-corruption legacy. The high court did tighten securities law closer to its former strength in United States v. Salman.
‘Law and Order’ and the Holder Memo
Trump earned a reputation on the campaign trail for condensing important issues of policy into catchphrase form, swapping facts for visual cues. On immigration, “we’re gonna build a wall.” On his brutish treatment of women, “Just Rosie O’Donnell.” For criminal-justice reform, Trump had “law and order,” a phrase that cues its own sound effect of most television-owning voters.
Portraying Bharara as a good fit for this stance, Scheindlin contrasted the prosecutor’s cases against the Obama administration’s efforts to combat mass incarceration.
To this end in 2010, the Department of Justice issued what is known as the Holder memo. So named for the former attorney general, the memo instructed federal prosecutors not to default to the heaviest charging and sentencing decisions in drug cases. Scheindlin remembered that Bharara’s prosecutors tended to ignore that advice, not only in narcotics cases.
“When I was on the bench all those years, his assistants routinely would ask for the highest sentence that they could ask for,” she said. “They were not lenient, and they would not ask that the judge exercise her discretion.”
One of those cases involved Russian arms trafficker Viktor Bout, now serving the second decade of his sentence for trying to illegally sell weapons of mass destruction to U.S. agents posing as Colombian guerrillas.
Bout had been vilified in a Hollywood movie as “The Lord of War” and in nonfiction as “The Merchant of Death” for his long record arming foreign warlords, dictators and militants.
Though Bharara’s prosecutors wanted Bout locked up for life, Scheindlin took issue with the U.S. government’s sting operation that ultimately nabbed the notorious arms trafficker.
Indeed the Colombian guerrillas Bout thought he was arming were undercover agents of the Drug Enforcement Administration. There is also no law in Bout’s native Russia that would have barred him from selling weapons to actual Colombian militants.
After a jury convicted him, Scheindlin dealt Bout the lowest allowable sentence: 25 years.
Viktor Bout deplanes after arriving at Westchester County Airport on Nov. 16, 2010, in White Plains, New York. Bout was extradited from Thailand to the U.S. to face terrorism charges after a final effort by Russian diplomats to have him released failed. (Courtesy of the U.S. Department of Justice)
“Even historically, sting operations do give judges pause,” Scheindlin noted.
In another federal trial that stemmed from a sting operation, the FBI offered four residents of a poverty-stricken New York community $250,000 if they would agree to blow up a synagogue and military airbase. Agents intercepted the plot that they created, and a jury rejected the men’s entrapment defense.
Bharara’s request for a life sentence for the so-called Newburgh Four earned harsh criticism from the judge in that case, Colleen McMahon, a former colleague of Scheindlin’s who is now the chief federal judge of the district.
McMahon had skewering the prosecutors for using tactics that she believe fell just short of illegality, and Scheindlin voiced similar objections.
“It’s a technique that is of concern because you can target who you want to target,” Scheindlin said. “You can decide who you want to lure in.”
In the narcotics realm, Bharara’s office brought a string of prosecutions targeting Latin American leaders and their families, including a former Guatemalan president and the son of presidents of Suriname and Honduras.
Recently Bharara’s team won the cocaine-trafficking convictions of two nephews of Venezuelan President Nicolas Maduro, after a jury rejected claims that the charges were politically motivated.
His office has defended strong sentences for pushers of especially dangerous drugs, deploying the “death-resulting” statute against dealers of fentanyl-laced heroin that has killed addicts. The statue carries anywhere between a 20-year and life sentence.
Preet Bharara’s Digital Drug War
Lindsay Lewis, an attorney who assisted in the defense of Silk Road founder Ross Ulbricht, went toe-to-toe against Bharara in a case that involves the digital front of the War on Drugs.
A little more than a block away from where that trial took place, there is a coffee shop called the Silkroad. Like Ulbricht’s website, the cafe is named after the ancient trade route that began with the Han dynasty two centuries before the common era.
Lewis agreed to meet there — “reluctantly,” she joked of the location — to discuss the case at length and the significance of Bharara’s extended tenure.
Ulbricht is now serving a life sentence for operating an underground drug website on the so-called darknet.
“The pursuit of his case and the way the office prosecuted that case is a suggestion of nothing short of the hardest stance on drugs that we can possibly imagine,” said Lewis, who last year became a director on the board of the National Association of Criminal Defense Lawyers. She spoke for this article in her individual capacity.
Like Scheindlin, Lewis saw Bharara’s administration as out of step with Attorney General Holder instructions to pursue fairer sentences on a case-by-case basis.
“Long sentences for low-level, non-violent drug offenses do not promote public safety, deterrence or rehabilitation,” the Holder memo says.
Though Silk Road had been no small operation — prosecutors estimated more than $1 billion in sales through the website — Lewis emphasized that Ulbricht himself had not been accused of being a dealer.
At Ulbricht’s appeal, U.S. Circuit Judge Christopher Droney appeared troubled by the 32-year-old’s life sentence.
“It is unusual for a young man in his early 30s with no criminal record, who himself was not dealing drugs, except some mushrooms at one point, at least there was some evidence that suggested that, to receive a life sentence,” Droney said in October.
Lewis described such severe sentences as par for course at Bharara’s office.
“Even after the supposed reform, his assistants weren’t give the quality and kinds of offers that I would have expected to have been given after that mandate,” she said.
To his credit, Bharara vigorously pursued the goals of Department of Justice’s Civil Rights Division with respect to clamping down on prison guards abusing inmates. His office reached a settlement reforming New York City’s Rikers Island and recently won the conviction of a guard who killed an inmate.
Like many observers, Lewis expects reforms like these to be dismantled if Sen. Jeff Sessions becomes the next attorney general, as is widely expected.
“I fear that this alignment, Preet Bharara and Jeff Sessions and Donald Trump, it’s essentially the end of criminal justice reform, and that’s a crazy and unbelievable thing to say when you think about the fact that really we just got started,” she said.
As for Trump’s vision for the War on Drugs, the president-elect reportedly praised the approach of Philippine President Rodrigo Duterte, accused of supporting death squads behind hundreds of extrajudicial killings. Sessions, whose confirmation hearing started Tuesday, once remarked that his only objection to the Ku Klux Klan was their members’ marijuana use.
‘I Want to Surveil’
Legal observers also find similarities between Trump’s campaign rhetoric on the subjects of surveillance and encryption and Bharara’s record in these areas.
Rhetorically, Bharara and Trump could not be farther apart on encryption technology. The U.S. attorney typically opts for the lawyerly rhetoric of balancing privacy and security in his public statements, whereas Trump fully embraced the role of Big Brother when discussing immigration at a rally in late 2015.
“I want to surveil,” Trump said. “I want surveillance of these people that are coming in, the Trojan horse, I want to know who the hell they are.”
Even if Bharara’s public statements are more measured, his office chafes at any practical constraints on its ability snoop. Perhaps the most well-known case involved prosecutors attempting to force Microsoft to turn over emails stored in Dublin servers.
The communications involved a target of Bharara’s drug investigation, but, rather than cooperate with the Irish government, his prosecutors tried to bypass the diplomatic process through a hybrid warrant-subpoena under the Stored Communications Act.
A federal judge sided with the prosecutors, but Microsoft quashed the request on appeal. The company’s president called the ruling “major victory for the protection of people’s privacy rights under their own laws rather than the reach of foreign governments.”
Working blocks away from Ground Zero, Bharara frequently raises the specter of a spectacular attack to argue about the need for prosecutors to “peek” into private communications.
“There are moments when reasonable people can appreciate and understand that there are people who want to slaughter all of you, and the people who are trying to protect against that are doing so in good faith,” Bharara told the Wall Street Journal in June. “They’re not trying to be Big Brother, and there should be a reasonable way for rational people to figure out what that balance is.”
For attorney Fred Jennings, a prominent privacy advocate at the firm Tor Ekeland, Bharara has embraced FBI Director James Comey’s “scaremongering” theory of encryption that terrorists have been “Going Dark.”
Jennings noted that the evidence does not support law enforcement’s dire warnings.
Of the more than 4,100 state and federal wiretaps reported in 2015, only seven could not be read because of encryption, according to the most recent report.
In a study titled “Don’t Panic,” researchers at Harvard University’s Berkman Center for Internet & Society said that fighting encryption in the name of national security would be like poisoning a restaurant to catch a terrorist.
“Yes, we might get lucky and poison a terrorist before he strikes, but we’ll harm all the innocent customers in the process,” the 37-page report states. “Weakening encryption for everyone is harmful in exactly the same way.”
Echoing this argument, Jennings noted that weakening encryption — through “back doors,” as some law-enforcement officials advocate — could have repercussions for critical infrastructure that depends upon strong security. The trend in law enforcement to advocate for “backdoor” entry into electronics could have unintended repercussions, he added.
“When you talk about mandating backdoor platforms, you’re also talking about bank data, credit card transactions, things that we encrypt and communicate with everyday in a way that is largely transparent to the end user,” Jennings said.
Asked about Trump’s ability to exploit surveillance against political rivals, Jennings told an anecdote of his own human-rights work, as a lawyer observing the attempted coup last year on Turkish President Recep Tayyip Erdogan.
Seeking to protect their plans, the coup plotters turned to the chat platform WhatsApp, whose parent company Facebook had recently introduced end-to-end encryption. The military officers reportedly named their group “Yurtta sulh,” Turkish for peace at home, but the Erdogan government discovered their communications and cracked down harshly on the plotters.
“There were quite a few communication records that were pulled from a chat platform that I suspect the developers never thought of a case of someone in a repressive regime who would round up all of those contacts and do who-knows-what to them,” Jennings said.
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