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