NY Watchdog Could Take a Bite of Trump Probe

*This piece was originally published by Times Union

If it has not already done so, the New York State Department of Financial Services (DFS) could vigorously pursue what Congress has so ponderously avoided: whether Deutsche Bank aided, abetted, or facilitated the Trump Organization in possible Russian money laundering.

As New York's bank regulator, DFS supervises Deutsche Bank's New York branch office. With its broad regulatory authority, and its numerous statutory tools that pare away obfuscation with surgical precision, DFS could very likely get to the bottom of this matter faster than Special Counsel Robert Mueller can alone.

On January 2, Glenn R. Simpson and Peter Fritsch published an astonishing opinion piece in the New York Times. Simpson and Fritsch founded Fusion GPS, the commercial research and strategic intelligence firm responsible for the now infamous "Steele Dossier" — a collection of intelligence reports that, among other things, recounts deeply troubling efforts by Russia to interfere with the 2016 United States presidential election in order to help then-candidate Donald Trump win. Simpson and Fritsch wrote that they had advised congressional investigators that their research had found "widespread evidence that Mr. Trump and his organization had worked with a wide array of dubious Russians in arrangements that often raised questions about money laundering." They also told Congress to "look into bank records of Deutsche Bank and others that were funding Mr. Trump's businesses." They concluded that Congress has been "uninterested in that tip," even though Simpson told the Senate Judiciary Committee that the retired British spy who authored the Steele Dossier — on his own — felt compelled to advise the FBI in July 2016 that then-candidate Trump could be subject to Russian blackmail. A week later, Sen. Diane Feinstein publicly released the transcripts of Simpson's Senate testimony.

Less than two weeks later, the House Intelligence Committee released transcripts of much earlier testimony by Simpson in which he similarly warned about the Trump Organization's possible involvement in Russian money laundering. Just as the Senate Judiciary Committee had, the House Intelligence Committee likewise declined to pursue Simpson's recommendation to investigate.

DFS could now take the torch and run with it. That certainly would not be a rash or unreasonable response. Alarms are sounding in all quadrants. Steve Bannon — Trump's former campaign CEO and Chief White House Strategist (but apparently his present nemesis) — was recently quoted by Michael Wolff as implicating Deutsche Bank in financial misconduct involving the Trump family. In 2014, Trump's son Eric was quoted as saying that the Trump Organization "didn't rely on American Banks" to finance business projects because "[w]e have all the funding we need out of Russia." And before that, in 2008, the president's eldest son, Donald Trump Jr., stated that "Russians make up a pretty disproportionate cross-section" of investors in Trump Organization assets, adding that "we see a lot of money pouring in from Russia."

Nor would this be the first time that DFS had investigated Deutsche Bank for Russian money laundering. Just one year ago, in January 2017, DFS fined Deutsche Bank $425 million for the bank's involvement in a scheme that laundered $10 billion in Russian funds. At best, Deutsche Bank has a prior record of woeful money laundering controls that undoubtedly gives New York (and likely federal) regulators indigestion. To date, it has also had a confounding and impenetrable business relationship with the Trump Organization — fraught with litigation and debt refinancing that surpassed hundreds of millions of dollars in prior unpaid Trump loans. Indeed, in his recent book "Collusion," investigative reporter Luke Harding seriously questions whether the Trump Organization's relationship with Deutsche Bank is connected to the Russian money-laundering scheme for which the bank was punished by DFS. The smoke has gotten thick.

So what can DFS do to clear the air? New York state law gives the agency extraordinary power. It can order Deutsche Bank's New York Branch to prepare a "special report" detailing all transactions in which the bank engaged involving the Trump Organization, its affiliates, and Russian-related entities or individuals. It can assign forensic bank examiners to analyze relevant bank files. It can subpoena bank records. It can subpoena documents from third-parties involved in those transactions, including perhaps other banks, consultants, brokers, and business associates of both the Trump Organization and Deutsche Bank. It can take sworn testimony from witnesses and hold hearings (potentially public) in which Deutsche Bank must appear before DFS to explain apparent violations of law, such as the purposeful or negligent facilitation of money laundering. Any or all of these regulatory actions may be warranted. And Deutsche Bank would risk its life-line to the New York financial markets if it were to mislead the agency.

The enforcement of anti-money laundering rules is a core function of every bank supervisor. Violation of those laws threatens the safety and soundness of banking institutions and the integrity of global financial markets. In these extraordinary circumstances, it also may have struck at the heart of American democracy.

The governing maxim for the Manhattan real estate industry — well known to the Trump Organization — has always been "location, location, location." Because New York is a global financial center, that same principle has made DFS responsible for supervising some of the world's largest financial institutions, Deutsche Bank among them. That is a solemn responsibility.

A divided Congress may have chosen to ignore a hot "tip," but DFS need not. Whatever the outcome, this investigation is far too important — for both New York and the nation — for it to go cold in a Russian winter.

Trump’s Immigration Proposal is Draconian and Un-American

*This piece was originally published by Economic Policy Institute. 

Yesterday the White House one-page framework for a legislative deal to provide a permanent immigration status to DACA recipients was made public, which is in addition to the four-page memo released on January 9 that included the Department of Homeland Security’s priorities for an “immigration deal.” The new one-page memo includes a long list of far-reaching demands to “reform” the immigration system, in exchange for remedying the crisis that President Trump himself imposed on the nearly 700,000 immigrants who were brought to the United States as children by their parents, and who voluntarily availed themselves to the U.S. government after they were promised that they would be protected and not deported by the Obama administration.

President Trump’s latest demands for major changes to the U.S. immigration system include additional legal authority to deport unauthorized immigrants, $25 billion in new funding for more border security and immigration enforcement agents, an end to the diversity visa program, and cuts to permanent immigrant visas for family reunification, among other things. All of this would be in exchange for putting up to 1.8 million DACA recipients and DREAM Act-eligible immigrants on a path to citizenship.

It is notable that the Trump administration is willing to extend the possibility of legalization and citizenship beyond just the current 700,000 DACA recipients, but doing so would still only legalize 16 percent of the total unauthorized immigrant population (1.8 million out of 11.3 million). DACA recipients and potential DREAMers themselves have made it clear that they reject a path to citizenship if it means that their parents and the millions of unauthorized immigrants left behind will be terrorized through a vastly expanded national deportation apparatus and additional border militarization, plus sharp cuts to future immigration levels.

Many of President Trump’s demands are bad ideas, rooted in racism and xenophobia, which will keep immigrants in fear and negatively impact the labor market. Including them in the context of urgently necessary legislation to protect DACA recipients—which should be clean and narrow—and after only a few weeks of negotiations, makes little sense. After making the ill-advised decision to end DACA without a permanent solution from Congress, the most pressing priority for all humane policymakers should be ensuring that DACA recipients do not become deportable or lose their ability to work and go to school. In addition, any proposal to reform the immigration system that is as broad and sweeping as president Trump’s should include legalization and a path to citizenship for all 11.3 million unauthorized immigrants.

DACA has been important to the recipients whose lives have been transformed for the better—by allowing them to attend universities, work, and live without fear of being ripped apart from their families and sent out of the country they have always considered their home. And by bringing DACA recipients into the formal labor market—granting them access to labor and employment law protections, and thereby raising their wages dramatically and resulting in new contributions to public coffers—DACA has also improved labor standards and increased social safety net funding for all workers. At a time when the Trump administration’s new worksite raids are disempowering immigrant workers by pushing them into the informal labor market, failing to legalize DACA recipients will have the effect of adding 700,000 exploitable workers to the U.S. labor market.

The Trump administration intentionally created a crisis by ending DACA as a way to achieve their immigration policy goals in exchange for ending the crisis they created. Congress should not reward president Trump for this by adopting his draconian policy preferences. Members of Congress should instead pass a clean DREAM Act that puts DACA recipients on a quick path to citizenship. A clean DREAM Act would represent sound moral and economic policy, and it’s what the vast majority of Americans support.

 

The Limits of Presidential Power: A Citizen’s Guide to the Law

January 29, 2018

BookTalk

by Lisa Manheim, Associate Professor of Law, and Kathryn Watts, Jack R. MacDonald, Endowed Chair, University of Washington School of Law 

Over the course of the past year, a seemingly endless stream of questions have emerged concerning what the law does, and does not, allow the President of the United States to do. For example, can the president build his promised wall along the U.S.-Mexico border? Can he impose a “shutdown” of Muslims entering the United States? Can he rollback various Obama-era environmental regulations, such as the Clean Power Plan? Can he fire Robert Mueller?

Notably, these sorts of questions are being asked not only by lawyers and others in the legal arena. They are being asked by people all across the country.

In response to these types of questions, we wrote a guide aimed at a general audience that provides a crash course on the laws that both empower and limit the President of the United States. That book, The Limits of Presidential Power: A Citizen’s Guide to the Law, is now available. We hope that our book provides an accessible and understandable guide to the what, why, and how of the laws that both govern the president and empower citizens.

We worked hard to keep our guide concise—but without sacrificing breadth or precision. We hit that balance at 178 pages, which allows it to be read fairly quickly. It begins with an overview of the federal government, including a discussion of the relationship between the federal government and state governments. It then discusses the powers that the law provides a president, including the power to appoint and remove key government officials, to veto laws, and to act as the nation’s commander-in-chief. Next it turns to the three main tools a president might use to exercise his powers. These tools include executive orders, involvement in agency rulemaking, and the exercise of enforcement-related discretion. Our book then identifies and explores legally supported checks on presidential power emanating from Congress, the Executive Branch, the federal courts, state governments, and non-governmental actors, including the media. We then turn to a case study—the evolution of climate change policy—in order to demonstrate the enormity of presidential power, as well as its limits. The book concludes with suggestions for how individuals can use their knowledge of the laws of presidential power to more effectively participate in politics. We discuss, for example, the importance of voting in all elections at all levels of government, as well as the possibility of commenting on proposed agency rules via www.regulations.gov.

One of the main messages of our book is that the president possesses an enormous amount of power but that his power is not unlimited. Instead, a president’s actions can be supported by, or opposed by, numerous different actors, including members of Congress, the courts, states, the media, and people like you.

Section 702 Renewal: Opportunities Lost and Gained

The recent reauthorization of Section 702 of the Foreign Intelligence Surveillance Act was never in doubt. However, civil liberties advocates were disappointed when Congress failed to adopt an amendment requiring the government to obtain warrants before seeking information about US citizens in the repository of data collected under statue. More broadly, the debate failed to grapple with the risks of electronic surveillance in the era of globalization, expanding storage capacities, and big data analytics. Nevertheless, looking forward, the reauthorization set up the potential for fresh judicial consideration of a key constitutional question and yielded some opportunities for enhanced oversight of the 702 program.

It was widely accepted that activities conducted under Section 702 were effective in producing useful intelligence on foreign terrorism and other national security concerns. Chances for reauthorization were further boosted by the fact that the broad outlines of 702 implementation were, once you got past the incredible complexity of the statute, well within a reasonable interpretation of Congress’ words. The trust generated by express Congressional authorization was augmented, after the Snowden leaks, by substantial and ongoing public disclosures by the Executive Branch about the law’s implementation – more transparency than any government in the world has ever provided about a similar national security program.

The pros and cons of 702 have been extensively debated. Briefly, the statute authorizes the intelligence agencies to target non-US persons reasonably believed to be outside the US to acquire foreign intelligence information. The Attorney General and the Director of National Intelligence (DNI) issue directives to US providers of electronic communication services, requiring them to cooperate with the government in acquiring information. Such acquisitions may be conducted only in accordance with targeting and minimization procedures approved by the Foreign Intelligence Surveillance Court, which must find that they are consistent with the Fourth Amendment. Actual targeting decisions are not reviewed by any court, but are made by relatively low level personnel in the intelligence agencies.

As described by the Privacy and Civil Liberties Oversight Board, the criteria for targeting are quite generous: First, an intelligence analyst must determine that the target is a non-citizen outside the US. Second, the analyst must determine that collecting communications of the targeted person will likely yield foreign intelligence.

On the foreignness question, the targeting decisions are very rarely wrong, and generally data collected by mistaking a person’s nationality or physical location must be purged when the mistake is discovered.

On the question of foreign intelligence value, however, the standard in the targeting guidelines  is very broad, and the presumption for what to do with over-collection is reversed: If, on initial inspection, the acquired communications are not found to contain foreign intelligence, or if they are never examined at all, they can still be retained under the minimization rules for a period of years and can be queried for foreign intelligence purposes (and by the FBI for criminal justice purposes too). These queries can be conducted with the names and other identifiers of US citizens.

This is where Section 702 starts to become worrisome. While 702 is targeted and is used to collect only a tiny percentage of the world’s communications, it still does involve massive scale. About 100,000 persons are targeted per year. This yields a lot of information. According to a FISA opinion cited by the PCLOB, in 2011, when the number of selectors was smaller than it is today, the government acquired 250 million Internet communications, in addition to telephone conversations. And much of this information relates to persons other than the targets. The Washington Post conservatively estimated that for each targeted person the communications of at least 9 other people are collected.

By definition, when the government is collecting the communications of a target, it is collecting the communications of those on the other end of the communications.  Even when the government is targeting only non-citizens abroad, it is certain to collect communications to and from citizens and persons in this country -- persons not suspected of any wrongdoing and not suspected of communicating anything of intelligence value.

The government claims the authority to search those communications whenever a US citizen comes to its attention in circumstances justifying further examination. After all, the government argues, the very first step in any government investigation or analysis is to ask “Do we already have anything in our files about this person?” But searching the 702 repository means that the government is able to retrieve communications of a US person without a court order – communications that the government could not have targeted without a court order in the first place.

With one change so riddled with exceptions that it scarcely matters, Congress left the querying practices in place. But Congress did take one important step that could address the constitutional question:  Is it a Fourth Amendment search, which normally requires a warrant, when the government queries a database of communications that have never been read or examined before? Orin Kerr, for one, has suggested it is a search.

We will find out within a year or so. The reauthorization bill amends 702 to require the government to adopt querying procedures and to submit them to the FISA court, which must assess whether they are consistent with the Fourth Amendment. That judicial inquiry will likely be aided by the institutionalization of the process for appointing amicus curiae attorneys to appear before the court in matters presenting significant questions of law. Judge Hogan considered the queries question in 2015 when reviewing the targeting and minimization procedures. He found the practice constitutional, but a new judge will have to take a look at the question again, in the context of the new querying procedures, which may yield an appeal to the Court of Review and possibly to the Supreme Court.

Also in the new law are three measures that could increase oversight of 702. One requires that the querying procedures include a technical procedure whereby a record is kept of each United States person query term used for a query. In the past, the FBI claimed that it could not count its queries of 702 data. Let’s hope that the Bureau does not try to exempt itself from this explicit requirement. Second, the reauthorization act requires extensive reporting to Congress if the government seeks to resume “abouts” collection, the controversial and now suspended practice of collecting communications that contain a reference to, but are not to or from, a target. Since abouts collection has been suspended, I think the government would have to seek explicit authority from the FISA court to resume it. The required reporting Congress on any move to renew abouts collection may induce another measure of caution. Third, the act requires the DOJ Inspector General to submit to Congress a report reviewing the FBI’s interpretation of, and compliance with, the required querying procedures. IG reports are no joke. I only wish that Congress had similarly required the IG for the Intelligence Community to do a similar report on practices at the National Security Agency.

Finally, the act requires the Attorney General and DNI to submit to Congress a report on “current and future challenges to the effectiveness of the foreign intelligence surveillance activities” authorized under FISA. Undoubtedly, the agencies will use this as another chance to complain about encryption and other Going Dark concerns. But a truly objective consideration of the effectiveness of electronic surveillance could benefit both civil liberties and national security. It may reveal that the government is spending more and more money acquiring more and more information with less and less value. Collecting less information on a more targeted basis may be more effective. Tightening the standards for targeting and for deleting collected data that appears useless would be two places to start. Demanding regular reviews of quality over quantity could afford a level of civil liberties protection.

Countdown to DACA Deadline

Deferred Action for Childhood Arrivals (DACA) is a policy implemented in 2012 that to date has enabled nearly 800,000 people who came to the United States before the age of sixteen, establish the requisite residence, physical presence and educational requirements to request a form of prosecutorial discretion known as “deferred action.” Originating from a rule published by the Reagan administration in 1981, grantees of deferred action may request work authorization if they can establish “economic necessity.” After receiving work authorization, the type of work a DACA recipient may enter is unrestricted, enabling one to pursue a job in a variety of sectors. DACA recipients with college degrees in a high-demand field are eligible to work in the area of their study and often do.

On September 5, 2017, Attorney General Jeff Sessions announced the end of DACA and in doing so set a deadline of October 5 by which certain eligible DACA recipients had to renew their requests for deferred action to potentially receive an additional two-year period of deferred action. AG Sessions also indicated that Department of Homeland Security would no longer receive new requests for DACA, nor would it accept renewal applications from DACA recipients whose DACA and work authorization expires after March 5, 2018. Importantly, those who currently have DACA will continue to retain their status and work authorization unless it is terminated or revoked.

The choice by the administration to end DACA is heartbreaking, legally flawed and has placed several DACA recipients in a legally precarious situation. In the weeks following the September 5 announcement to end DACA, immigration lawyers, advocates and law school clinics rushed to assist DACA holders with their renewal applications and advised the same to consult with an immigration attorney to determine eligibility for alternate relief. According to the Department of Homeland Security, 22,000 qualifying DACA recipientsfailed to renew before the October 5 deadline. According to the Center for American Progress, nearly 17,000 people have already lost DACA protections.

In the courts, several lawsuits were filed to challenge the end of DACA. On January 9, 2018, Judge William Alsup (N.D. Cal.) issued a nationwide injunction finding the rescission of DACA to be unlawful. The court found that the government’s decision to end DACA over a “pithy conclusion that the agency had exceeded its statutory and constitutional authority” was a mistake of law. In response, the Department of Homeland Security announced a process for accepting renewal applications from current and previous DACA holders. Importantly, neither the court order nor the USCIS guidance applies to those who have never had DACA previously. Meanwhile, and in response to an appeal by the administration, the Supreme Court has requested for expedited briefing to decide whether to hear the case.  Having spent more than a decade studying the history, legality and role of prosecutorial discretion in immigration cases, and like Judge Alsup, I firmly believe that the administration’s choice to end DACA for so called statutory and constitutional reasons was a mistake of law.

What happens in the courts around the DACA rescission is unknown but in the meantime, a window is open for certain individuals to renew DACA after understanding the risks. Meanwhile, and days before his State of the Union Address, President Trump is rumored to be extending the DACA deadline of March 5, the arbitrary date imposed by DHS on September 5 of last year when rescission was announced. The mixed messages sent by the administration and the President himself about DACA are manipulative and only serve as confusion for thousands of former and current DACA holders who call America home.

Meanwhile, Congress and the administration have been discussing and negotiating legislation that may include a “DACA-fix” by providing a durable status to those protected by DACA and those similarly situated. The support for a permanent solution or a DREAM Act by Congress is overwhelming and includes several companies and employers in key industries. Employers in high demand industries understand too well how important DACA employees and professionals are to filling needed jobs in the American workplace, advancing diversity, and improving the economy. As described by in a letter by American Medical Association to Congress in support of a solution for DACA holders, “ Our nation’s health care workforce depends on the care provided by physicians and medical students with DACA statute, who are trained at medical schools in the United States and fill gaps in patient care…Estimates have shown that the DACA initiative could help introduce 5,400 previously ineligible physicians into the U.S. health care system in the coming decades to help address these shortages and ensure patient access to care.”

As one who has worked in the legal profession for nearly 20 years, I am acutely aware of the positive contributions and diverse ideas law students and lawyers with DACA bring to the field and to their clients. As a professor on a large college campus, I have also witnessed the vulnerability and fear that soon to be college graduates or professionals with DACA have in losing status and the ability to work in the United States. It is critical that Congress find a solution for DACA holders and those with long term contributions and talent in the United States.

33 Prominent Economists, 3 Nobel Laureates to the Supreme Court: The Anti-Union Position in Janus is Simply Wrong as a Matter of Basic Economics

by Dan Jackson, Keker, Van Nest & Peters

Thirty-six distinguished economists and professors of law and economics including three Nobel laureates, two recipients of the American Economic Association’s prestigious John Bates Clark Medal, and two past presidents of the American Economic Association filed an amici curiae brief  to assist the Supreme Court in understanding the free-rider problem at issue in Janus v. AFSCME.

The brief argues that the free-rider problem has broad application and acceptance in economics. While this is obvious to economists, it is at issue in this case. The key point the brief makes is that it is well established in economics that if an individual chooses not to pay for something that will be provided to them for free, that does not mean they do not value it. As explained in the brief, “Withholding financial support does not imply antipathy; it follows from individual self-interest and the collective nature of the benefits provided, even in the absence of any disagreement about those benefits. That is the essence of the free-rider problem.”

The economic luminaries behind the brief also point out that the greater good would be harmed if the Supreme Court rules for the petitioners, saying in part “…even if some contributors persevere, the amount of the collective good will be sub-optimal, and will tend to decrease further and further below the optimum as the contagion of free riding spreads, resulting in increasing exploitation of the dwindling contributors.”