0:03

This is Bloomberg Law with

0:05

June Brusso from Bloomberg

0:07

Radio.

0:10

That was a rigged election and it's a

0:12

shame that we had to go through and it's very bad

0:14

for our country.

0:15

We've heard that false claim from Donald

0:17

Trump about the twenty twenty presidential

0:19

election over and over and

0:22

over, despite the fact that sixty

0:24

court cases found no evidence of

0:26

fraud or illegality. It seems

0:28

to be part of Trump's repertoire.

0:31

The election is being rigged by

0:33

corrupt media, pushing false allegations

0:36

and outright lies in an

0:38

effort to elect Hillary Clinton

0:40

president.

0:41

Of course he dropped those rigged

0:43

election claims after you won,

0:46

but they're just below the surface of

0:48

this year's election.

0:49

Republicans must win. We want

0:51

to landslide. We wanted to be

0:54

too big, too rigg Will there.

0:56

Be a repeat this year of the litigation

0:58

frenzy that followed the twenty twenty

1:00

election. Well, the election is still

1:03

six months away, but political

1:05

groups are filing so many lawsuits

1:07

over voting rules that the numbers

1:10

could reach the records set in that bitterly

1:12

contested twenty twenty election. The

1:15

Democratic and Republican parties have raised

1:17

about forty one point three million

1:20

dollars to spend on court fights, and

1:22

nonprofits, including some dark

1:25

money groups, have likely raised

1:27

hundreds of millions more. Joining

1:29

me is elections law expert Derek Muller,

1:31

a professor.

1:32

At Notre Dame Law School.

1:34

Fighting over election rules in court

1:36

is big business for lawyers and

1:38

the groups challenging them.

1:40

Just how big?

1:41

So we know that the

1:44

political parties can collect significant

1:46

amounts of money ear mark designated

1:48

for election expenses. So the RNC and

1:50

DNC have large pools

1:53

of money, you know that are upwards

1:55

of one hundred million dollars a year now

1:57

to be thinking about these kinds of expenditure.

2:00

So they have significant funds

2:02

that they can use to involve themselves

2:04

litigation, to start litigation, to intervene

2:07

in litigation. But it's not even just the parties.

2:09

It's the growth of additional five

2:11

LL one C three's nonprofits organizations

2:14

dedicated to rooting out voter fraud

2:16

or protecting democracy or whatever we might

2:19

label the organizations and those we

2:21

don't even have a sense of the scope and scale

2:23

of these things. So it's significant amounts of money

2:25

coming into the system specifically

2:28

for litigation.

2:29

And you've done some research on the political

2:32

party's legal expenses.

2:33

There are so many different ways of calculating

2:36

the money. So I did research this. I

2:39

found that this fundraising for the twenty

2:41

twenty one and twenty twenty two election cycle

2:43

among Republicans and Democrats was one hundred

2:45

and fifty four million dollars. So it's a two year

2:48

period for both Republicans and Democrats

2:50

and a significant sort of chunk. It's

2:53

an escalating figure. We won't have

2:55

the figures for this next cycle, you

2:57

know, we only have the first few months of this cycle right

2:59

now now. But again, that's a significant amount

3:02

of money specifically designated

3:04

exclusively for litigation.

3:06

Expenses, do we know?

3:08

And I believe that's about thirty times

3:10

what the party's legal expenses were

3:12

back in two thousand and three.

3:15

And Congress played a role here, tell us

3:17

what happened in twenty fourteen.

3:19

Yes, So in twenty fourteen

3:23

there was called KROM the BEUS, a continuing

3:25

Resolution omnibus bill that

3:27

has a number of provisions that people's eyes

3:30

Mike lays over thinking about. But as

3:32

a part of that, one of the things

3:34

that they did was change some of

3:36

the contribution limits to the

3:38

major political parties. The notion

3:40

being right. Now, you can only give thirty

3:43

three hundred dollars for the primary, thirty three hundred

3:45

dollars for the general for presidential candidate or

3:47

senate candidate or whatever it might be. You can also

3:49

give fixed amounts of money to the

3:52

parties themselves. But the argument

3:55

was, well, there's other money that we could give to the

3:57

parties that would help them with their expenses.

3:59

That doesn'tbody say risk of corruption, right,

4:01

We're worried when we contribute money to candidates

4:04

or the party it looks like it's for corruption.

4:06

But what if we have some kinds of earmarked expenses

4:09

for instance, you know, running the presidential

4:11

nominating conventions. If you could just designate

4:14

an additional one hundred thousand dollars

4:16

to the parties to run their presidential nominating

4:19

convention. So we added some contribution

4:22

limits ten years ago in this bill,

4:24

and one of those was an

4:27

additional sort of designation for

4:30

we count or other litigation expenses.

4:33

And at the time that was one hundred and six thousand, five hundred

4:35

dollars that gets increased for inflation over

4:38

the years. But I mean, you can give about one hundred

4:40

and twenty thousand dollars now to

4:43

a political party just

4:45

to help it litigate, just

4:47

to help it engage in election related

4:50

litigation. So there's no question that

4:52

for a very long time, from about

4:54

twenty three to twenty fourteen, as I tracked

4:56

this, parties would spend about three

4:58

to five million dollars a year on litigation

5:01

expenses. And now we're just seeing

5:03

the earmarks the skybrocket

5:05

because as the parties collect bigger

5:07

and bigger checks from donors, there's only

5:09

so many places for the money to go because

5:12

there are other contribution limits. And

5:14

one of those places now that you can give and give

5:16

substantial amounts of money that you

5:18

can only give about six thousand dollars to a presidential

5:20

candidate, but you can give one hundred and twenty thousand

5:22

dollars to the candidate's lawyers. So it's a

5:24

significant mismatch that is funding this litigation.

5:27

And there are groups nonprofits

5:30

where we don't know where their money is coming

5:32

from or how they're spending it.

5:34

So when it comes to the DNC or the

5:37

RNC, we know their donors, we know the

5:39

individuals who have contributed to

5:41

these entities, so we don't have sort of

5:43

the so called dark money groups. You

5:45

know, there are limitations about what packs

5:48

can contribute to parties,

5:51

So we have some transparency about where

5:53

that money is coming from, at least in terms of the

5:55

direct contributions to the parties.

5:58

Where where we're label as dark money

6:00

comes in would be if there are other

6:02

outside groups on the right or the left

6:05

who are starting litigation,

6:07

engaged in litigation, funding litigation,

6:10

intervening litigation, who want

6:12

to support or promote certain

6:14

kinds of laws or anticipate those ahead

6:16

of the twenty twenty four election. So you've

6:18

seen some of these organizations from you know,

6:21

former government officials, you know,

6:23

both on the right and the left, to support Trump, who oppose

6:25

Trump. I think we often think of that those terms,

6:27

maybe rather than a Republican and Democrats these days.

6:30

But those organizations, you know, we don't

6:32

necessarily know where their funding's coming from,

6:35

who's supporting them, are the reasons why they're

6:37

litigating. But when it comes to parties, at least we

6:39

have some pretty good transparency.

6:41

This, you know, sort of fierce challenging

6:45

of election laws and minution

6:47

election laws. Did it start after

6:50

bushby Gore or did it start

6:52

in twenty twenty.

6:55

It keeps rising. So there's lots

6:58

of inflection points. Yeah, So

7:00

Professor rickhaps in his tracked how Bush

7:02

versus Gore was sort of the first wave

7:04

of these things. Because Bush versus Gore

7:06

it's not just that, you know, a very small

7:08

margin to Florida could affect the outcome of a presidential

7:11

election. It also signified that the federal

7:13

courts were open for business about how

7:15

you did a recount, right, how

7:17

your machines were counting ballots.

7:20

So we see a steady

7:22

uptick in election litigation after

7:25

the two thousand election. But again, there

7:27

are different inflection points that arise, you

7:29

know, throughout this period of time. As states

7:32

introduce vhot identification laws

7:34

and those become a sort of rallying cry

7:36

and a challenging point for

7:38

different groups or different legislatures. We

7:40

see just the significant uptake in litigation

7:43

around those things. Promnibus Bill twenty

7:45

fourteen, twenty fifteen creates

7:47

this mechanism for more funding and elections.

7:50

You know, after the twenty sixteen election

7:52

we see Green Party candidate joll Stein pressing

7:54

for recounts around the United States, and twenty

7:57

twenty we see the run up to the election

7:59

is a lot of changes due to COVID,

8:02

and then there's just tons of litigation

8:04

being filed to challenge the rules or

8:07

to request accommodations from the rules,

8:09

followed by all those challenges after the twenty

8:11

twenty election. So every cycle

8:14

just seems to be bringing its own new challenges,

8:17

new crises, new rallying points

8:19

to fundraise off of. You know, a

8:21

lot of election laws that were enacted

8:23

by legislators in the past that might

8:25

have been ignored or sort of just moved

8:27

beyond and party organizers would have

8:30

accommoded them or handled them now are

8:32

being challenged. Almost any change

8:34

to your election machinery in very

8:36

basic terms, from the buying of a machine

8:38

to the list maintenance of

8:41

your voter roles gets challenged by

8:43

some group on the right or left. So we're

8:45

just seeing this escalation, and I think part

8:47

of it is the availability of funding, and maybe part

8:49

of it is the awareness that parties think that

8:51

very small differences can matter, and so

8:53

they want to challenge as much as

8:56

they can, anticipating that a small change

8:58

might matter in their election.

9:00

And are the big groups

9:02

that are challenging and defending these

9:04

laws, are they all tied to

9:06

a party or a candidate or

9:09

any of them independent.

9:11

So a number are at least extensively

9:13

independent, right, but a number of them do tend

9:16

to file on one side or the other. So

9:18

some of them will have former Republican

9:20

officials think about restoring integrity and trust and

9:22

elections, the Honest Elections Project or things

9:24

like that, or some of them will have former Democratic

9:27

officials or of never Trump officials who

9:29

are participating. Some of them State United

9:31

Democracy Center, Protect Democracy, or some

9:33

of these organizations tend to file much more heavily on

9:35

the Democratic side and the Republican side,

9:37

So you can trace what these organizations

9:39

are doing and see where their

9:41

officials are. And they can't formally coordinate

9:44

with the parties because if you have that coordination,

9:47

it creates campaign finance

9:49

problems. But it's that they are going around.

9:51

They're filing litigation again places

9:53

maybe where the party doesn't have the resources

9:55

to do it, or isn't aware of it, or wants

9:58

another group rather than the party to be involved.

10:00

That said, the parties do still have some significant

10:02

involvement. I's the most significant party level

10:04

litigation right now. It's Democratic

10:07

National Committee leading a number of challenges

10:09

to keep Robert F. Kennedy's name off

10:11

the ballot in a number of states, I think viewing

10:13

him as a third party threat. I think the R

10:16

and T might view him as a threat too, but hasn't filed

10:18

those challenges. So again, it's hard

10:20

to pin down exactly who's leading

10:22

the litigation in some of these places. It's following

10:25

the headlines, seeing who's led on the

10:27

docket, what the lead party's name is, and then

10:29

trying to identify, you know, who they

10:32

tend to support or where their attorneys have come

10:34

from.

10:34

Prominent Democratic lawyer Mark Elias

10:38

said that some of these new Republican

10:40

groups are emerging to launch mass

10:42

voter challenges against unsuspecting

10:45

voters, and he called the group's vigilantes.

10:49

Yeah. I mean, we can think about this in a couple of different

10:52

ways. And you know, I think attorneys like

10:54

mister Elias and others have long represented

10:57

the Democratic Party, but then they also represent

11:00

private or civic organizations, right,

11:02

And there's no question that some of these organizations,

11:05

like the NAACP but the ACLU,

11:07

have long been involved in voting

11:09

litigation. Now at the same time, there

11:11

are other organizations that, you know, they

11:13

seem to be popping up a new one almost

11:16

every week. Right, there are lots of

11:18

individuals who believe

11:20

that elections need to be

11:23

run or administered in a particular way.

11:25

They think they have the key to being able

11:27

to set up the litigation. They think that other

11:30

organizations somehow are failing or have not

11:32

stepped into the breach, and they're able

11:34

to set up a pitch and maybe get donors to contribute

11:37

and provide the opportunity to litigate.

11:39

And if you have these organizations cropping

11:42

up and they are going out and they

11:44

are challenging things that

11:46

maybe wouldn't have been challenged in the past, or

11:49

an organization that is jumping up for the

11:51

first time and filing these lawsuits, and

11:53

maybe they're still considered and likely

11:55

to lose, you know, I mean, you can call them vigilantes

11:58

step out there and step into the At

12:00

the same time, the courts are going to have the final say. Right

12:03

when you file the lawsuit. It's not like you win.

12:05

It's not like you get the election law changed or struck

12:07

down or the administrative procedure adjusted.

12:09

It does increase the amount of litigation we

12:12

see. It increases the screen on courts. Do

12:14

you think it increases some of the perceptions

12:17

that the public might have that these elections

12:19

are just under constant scrutiny

12:22

by the courts and subject to judicial

12:24

decrees, which I don't think a situation

12:27

we want to find ourselves in. But you know, to

12:29

the extent that the courts are open for business

12:31

and open to hearing these challenges, I think

12:33

we're going to continue to see more of them.

12:35

Coming up Next. Which state has the

12:38

most unsettled questions around

12:40

its election procedures?

12:42

This is Bloomberg.

12:44

The twenty twenty four US election

12:46

is already being fought in the courts.

12:49

Political group, some backed by anonymous

12:51

donors, are launching so many lawsuits

12:54

over voting rules this year that the numbers

12:56

could approach the record set in the bitterly

12:58

contested election. I've

13:01

been talking to elections law expert Derek

13:03

Muller, a professor.

13:04

At Notre Dame Law School.

13:06

Do you think that with all these lawsuits, the

13:09

more you have courts deciding

13:11

these issues, the more voters

13:13

think that the fix is in

13:16

or their vote doesn't count, or

13:19

you know, the system.

13:19

Is just screwed up, and

13:21

it's very hard, right. I mean, I think there's no question

13:24

that a lot of voters after two thousand, A

13:26

lot of Democrats feel like the court decided

13:28

the election, and you know that they lost

13:31

at because of the judiciary. I think there are a lot

13:33

of Republicans after the twenty twenty election

13:35

who say, you know, we didn't get our chance,

13:37

We didn't give a chance to sort of present our

13:39

evidence in the courts. And you see

13:41

this with other candidacies. It's

13:44

Stacy Abrams in Georgia and Kerry

13:46

Lake and Arizona, and you

13:48

can go on down the line. You can find Democrats and Republicans,

13:51

for different reasons and with different degrees

13:54

of legitimacy, arguing

13:56

that the election was stacked against them,

13:58

or the charges of the election was rigged in

14:01

some way. You know, it's not good rhetoric, it's

14:03

not good language. It's not good for the public to have

14:05

those things being said by officials, and then

14:08

to have the courts that step in, or

14:10

they're even blamed when they don't step in. You know, it leaves

14:13

us in a pretty precarious spot in the United

14:15

States. Again, I think the presumption was,

14:17

and you can even think about this in two thousand,

14:19

that when an official loss,

14:21

the official would concede and move

14:24

on, and we would sort

14:26

of just prepare for the next election. Now

14:29

we realize there's tremendous fundraising

14:31

power in rejecting election results,

14:34

in denying legitimacy of the winner, that

14:36

voters actually get

14:39

motivated and encouraged by that by

14:41

wanting to contribute to candidates whose claim

14:43

they've been wrong that an election has been stolen.

14:46

So it's a very precarious spot for us

14:48

as a democracy if we increasingly

14:51

have a system where the people

14:53

believe that if their candidate loses,

14:56

it's an illegitimate election, and

14:58

that when those words are spoken,

15:00

actually incentivizes them to contribute

15:02

money to the political consultants

15:04

who are making those claims. It's not a good place

15:07

for us. And I don't know what's going to change

15:09

that unless we have a true sea change

15:12

culture and how political

15:14

operations and litigation are being run in the United

15:16

States. And that's not im easy thing.

15:18

You know, when you read about the lawsuits,

15:21

it seems like the vast majority

15:24

and maybe it's because these are the ones that get attention

15:27

are not helping to clarify things,

15:29

but they're attacking this minutia

15:32

to deter the process.

15:35

Talking about this from kind of an economic standpoint,

15:37

if you have limited resources

15:40

to challenge the rules

15:42

governing elections, you are

15:45

going to challenge the things that you think are

15:47

the biggest deal right, the most important

15:49

ones, the ones that you think are really truly

15:52

changing the game. And that's also

15:54

the case that if you didn't have money earmarked

15:57

for litigation as a campaign, you

15:59

would have to make a call, do I think this

16:01

two hundred and fifty thousand dollars is better

16:03

spent on advertisements

16:06

in our district or on litigating

16:10

you know, this absentee voter rule

16:12

or this drop box rule or whatever it is.

16:15

So in the past, you would focus your

16:17

resources on those things

16:19

that were the most salient issues

16:21

that you thought had the highest likelihood of winning,

16:23

and those things that you thought were better

16:25

uses of resources than sort

16:28

of ordinary political expenses. Now,

16:30

when you earmark the funds, you are saying

16:32

this money is for only litigation. These

16:34

contributions can only be for litigation purposes,

16:37

so you don't have to make that trade off. And

16:39

the more resources you have, the more

16:42

money you have to spend on litigation, then

16:44

the more things you can challenge,

16:46

and the more things you challenge, by definition, you

16:48

are challenging weaker and weaker claims,

16:51

or more and more marginal claims, more and more

16:53

minutia of elections to say, you

16:55

know, we're dealing with a very small subset

16:57

of what we think could be at stake here,

16:59

So we can say, you know, at a very

17:01

high level, of course, we want elections to

17:03

be run fairly and with integrity. We

17:06

want every eligible voter to have a reasonable

17:08

opportunity to vote, and we don't want that

17:10

vote unreasonably burdened. But

17:13

we now expect a lot of things,

17:15

even what we could describe as fairly small

17:17

things about how elections are

17:19

run, in terms of how

17:22

counties are purchasing voting

17:24

equipment or the methods they use

17:26

to tabulate ballots. They're just being routinely

17:28

challenged. So I take less and less back

17:31

each day as I read the headlines about a new

17:33

lawsuit being filed, because you

17:35

know, many of these lawsuits just don't go anywhere. They're

17:37

not going to end up being successful, or even

17:39

if they're successful to the district court level, they're likely

17:41

to be reversed and appeal because I think

17:44

the more litigation we see just there's a lower

17:46

likelihood of success of each ensuing lawsuit.

17:49

Well it's watching that escalation

17:52

and trying to calculate what's the

17:54

actual added value at the end of the day, how

17:57

much of it is win loss rate, and how much of it

17:59

is convince donors they're

18:01

committing those of your fund raised from to say, hey,

18:03

we've filed a lawsuit, we're fighting. We're

18:06

fighting the fight, and then even if we lose, the point

18:08

is we're fighting. So that's been a

18:10

change in the dynamic. I would say over the last couple

18:12

of decades, you think.

18:13

That Pennsylvania is the state with the most

18:16

unsettled questions around

18:18

its election procedures. Hence we

18:20

are coming close to the election. What

18:22

is unsettled in Pennsylvania.

18:25

Yeah, Pennsylvania is definitely the

18:27

place I've been looking at for years,

18:29

and we saw it after twenty twenty, we saw before

18:31

twenty twenty, and we're seeing in the end before twenty twenty

18:34

four. It's a combination of factors. It's

18:36

a Republican controlled legislature

18:38

with the Democratic governor, you know, its own

18:40

challenge in a number of places, but there

18:42

seems to be an unusual recalcitrance

18:45

inside the state to try to address a result

18:47

some of these issues. It's issues that have

18:49

been known about how absentee

18:51

ballots are processed in the state,

18:53

and especially if there's an uptick in absentee ballots

18:56

after the twenty twenty election, about what kinds of

18:58

information is required to count the ballot. Ambiguities

19:01

in the statutes that have left

19:03

the State Supreme Court in its

19:05

own internal difficulties thinking about

19:08

remedies, it advising the legislature

19:10

to provide some clarity, and again the legislature

19:12

refusing to provide that clarity. It's

19:14

also the fact that Pennsylvania is not

19:16

just a closely contested state. You know,

19:18

there are many closely contested states. It's a large

19:20

state, so there are a number of electoral

19:23

votes in play for thinking about presidential

19:25

election. And it's a state with some of the most

19:27

significant local discretion to

19:29

election officials. So you knowing

19:31

about different systems where the Secretary of State provides

19:34

more guidance and that gives some

19:36

uniform clarity for how county

19:38

officials do their job when the legislature

19:41

has created some ambiguities or left place

19:43

for the administration of laws, Pennsylvania

19:45

you don't have that, So you have a lot of counties doing

19:48

individualized things in some places,

19:51

you know, there might be ten different standards

19:53

across the state about how they're supposed to handle

19:55

a particular issue that creates an

19:57

equal protection problem. Similarly situated

20:00

voters are being treated differently across the

20:02

state. That also spurs

20:04

more litigation to figure out what the

20:06

uniform rule needs to be or where there

20:08

can be deviation. So these

20:10

county officials in the different jurisdictions

20:13

have also sort of failed to coordinate with each other

20:15

and have very strongly held views individually

20:18

about how the elections should be administered.

20:20

So it's a series of issues that we have

20:22

known for several years that the

20:25

legislature and it's really I think the legislation and the

20:27

governor have failed to lead

20:29

and failed to act in a way to protect

20:31

the elections in the state and to provide some clarity.

20:33

And there's no question I think Republicans, democratsm I think

20:36

very differently about how the election should be administered.

20:38

But I think to the extent that you can

20:40

bargain for some agreement

20:43

about that and provide that guidance

20:46

would go much much farther to protecting

20:48

the rights of everyone involved, rather

20:51

than sitting back waiting to see what

20:53

happens, and if it's close enough, litigating it

20:55

and trying to stave off a disaster. But

20:58

you know, I'm not in the legislature there, I'm

21:00

not in the governor's office. They're trying to figure out what that looks

21:02

like. It's a different political climate, but it's

21:04

the reality of what we see in a state like

21:06

Pennsylvania.

21:07

It sounds like it'll be a nightmare for twenty twenty

21:09

four.

21:10

The election administrator's prayers for wide margins,

21:12

right, the question is,

21:14

you know, if Pennsylvania is decided by

21:16

five points, nobody cares. Right,

21:19

if it's decided by less than

21:21

one percentage point, or you know, whatever

21:23

you view as sufficiently close, then you

21:25

have more and more litigation around it. So if

21:28

there's no question there's going to be significant attention

21:30

to Pennsylvania for how close the election

21:32

is, the size of the electoral votes at stake, and

21:34

then of course you have these decentralized issues

21:36

that remain a constant source of

21:38

litigation at the state.

21:40

Arizona got a lot of attention after

21:43

the twenty twenty election with armed

21:45

people intimidating voters.

21:48

You had the conspiracy theories.

21:50

And the recounts is that

21:52

likely to happen again this year.

21:55

It's hard to know. So Carrie Lake, who lost

21:57

the governor's election twenty twenty two, is

22:00

running for Senate. How much has she

22:02

learned her lesson about losing. How

22:04

much does she want to redouble those efforts. It's hard

22:06

to know. You know, I think there were

22:09

some particularcerns that came out

22:11

of COVID, and a lot of changes about

22:13

elections during COVID, more absentee

22:16

ballots, drop boxes, things like

22:18

that. And then again some people

22:20

who you know, would sell movies or

22:22

books preying on people's fears without

22:24

sort of material evidence resulting. And yeah,

22:27

a federal injunction against one of these

22:29

organizations that was providing

22:31

armed surveillance at some drop

22:33

boxes in the state. You know, I think,

22:36

you know, we watched the primaries. We see if

22:38

things are calmer than as opposed to

22:40

what they were in twenty twenty two, we'll

22:42

see how why the margins are. But you

22:44

know, I think the question for the Republican Party

22:47

in Arizona is, look, despite all this

22:49

stuff, we've lost significantly.

22:51

We've lost a lot of offices in this state.

22:54

We've lost both US Senate seats,

22:56

We've lost the state in the presidential election. We've

22:58

lost essentially all of the executive offices

23:00

in the state and the last election. Is

23:02

it time to think about a new playbook

23:05

and thinking about encouraging voters

23:07

rather than telling our voters that the system is

23:09

rigged. You know, again, it's a lot of speculation

23:11

about what kinds of fears are going to be

23:14

drummed up in these jurisdictions, what

23:16

kinds of people are trying to make a quick book

23:19

by selling people conspiracy theories,

23:21

and at what point, you know, political

23:24

organizations and say the Republican National

23:26

Committee steps into the state and says, look,

23:28

you can't keep destroying

23:31

our own credibility in terms of how elections

23:33

are administered, because if you are constantly

23:35

telling people that the election is rigged,

23:38

they won't show up and Republicans will lose.

23:40

So we'll see how much self interest is there as well.

23:42

But there's no question that some of the highest temperature

23:45

was in the state of Arizona, and we'll see

23:47

if that carries through in twenty twenty four.

23:49

Finally, could twenty twenty

23:51

four be worse as far as litigation

23:54

election litigation than the endless

23:56

litigation we saw after the

23:59

twenty twenty presidential election.

24:02

Well, it could be. It always depends

24:04

on how close it is, Right, the closer the

24:06

margin, the more litigation. Now we

24:08

say that, you know, twenty twenty in a way wasn't

24:10

particularly close, because you would

24:12

have had to flip several states

24:15

with somewhat significant

24:17

margins of victory in those jurisdictions,

24:19

even after a recount in places

24:22

like Georgia. So we'll have to see,

24:24

you know, if it's a Republican loss

24:26

or an apparent Republican loss. There

24:29

are a number of attorneys who promoted

24:31

things in twenty twenty and filed lawsuits

24:33

who are facing sanctions or have been disbarred,

24:36

And I don't know if that's going to be sobering for attorneys

24:38

on the Republican side to think about the quality

24:41

of the claims they bring to be more

24:43

limited and constrained. And again,

24:45

it depends on the size of the loss, the scope of

24:47

the loss. And many of the strategies in

24:49

twenty twenty turn on allegations that

24:52

states change their laws in the middle of the pandemic

24:54

inappropriately. You're not going to see that kind

24:56

of dynamic effect in twenty twenty

24:58

four. And there are changes the electoral

25:00

account reformat to that sort of tighten

25:03

some of the deadlines and force governors

25:05

to submit certificates in an earlier

25:07

and more timely fashion. So I think there's

25:09

a decent chance we would see less

25:11

litigation on that front for Democrats

25:14

and a close loss. Again, it's hard to know exactly

25:16

what that would look like. You know, how many resources

25:19

would be focused on certain jurisdictions to

25:21

allege their violations of federal

25:23

law. Again, I think it depends on the kinds

25:25

of jurisdictions Where places like Pennsylvania,

25:28

where you have more disparate methods

25:30

in how ballots are counted across counties,

25:33

you have more opportunities to bring those challenges

25:36

and to try to get more absentie you other

25:38

kinds of ballots counted, which might redound

25:40

to the benefits of whichever candidate

25:42

is trailing at the time trying to bring these

25:44

challenges. But it's a high degree of

25:46

uncertainty. We might see more in

25:49

twenty twenty four. And you know, I

25:51

go back to twenty twenty, we didn't see a lot

25:53

of states with litigation. We just saw a lot of

25:55

litigation concentrated in one state. Now it did

25:57

culminate in one case Bush versus Gore,

25:59

but there's still a lot of litigation happening

26:01

there. I think the thing about twenty twenty that was more

26:03

remarkable with seeing how diffuse and spread

26:05

out the litigation was, and I think that's

26:07

less likely to see that that kind of litigation

26:10

spread out. But if the election turns

26:12

on a close result in one or two

26:15

states and not just four or five states,

26:17

I would not be surprised to see a significant uptaken

26:19

litigation.

26:20

I guess we should all hope then for wide margins.

26:23

Thanks so much, Derek. That's Professor

26:25

Derek Muller of Notre Dame Law School

26:27

coming up next. Why Trump's social

26:30

media company is a wash

26:32

in legal cases. I'm June

26:34

Grosso and you're listening to Bloomberg. Donald

26:37

Trump's newly public social media

26:40

company is entangled in many

26:42

legal cases. The bulk of them

26:44

involves suspected misdeeds by

26:46

the executives who help set the company

26:49

up and merge it with a public entity,

26:51

and by the former president himself.

26:54

The cases are entangled

26:56

and very confusing. Here to help

26:58

us sort it all out, he is Bloomberg Legal

27:01

reporter Greg Ferrell. Greg start

27:03

where it started truth Social.

27:05

So after the election, after Trump lost,

27:08

after the January sixth riots

27:10

on Capitol Hill, Trump found that he was

27:12

no longer welcome at most of the major social

27:15

media sites, especially Twitter, and

27:17

he decided in the aftermath of that to set

27:19

up his own company, his own social

27:21

media platform, truth Social, as it's

27:23

known, and to take it public

27:26

and turn it into a source

27:28

of wealth would be difficult on its own,

27:31

but as you know, and as we've written a lot

27:33

about here at Bloomberg, SPACs

27:35

had become very popular a few years ago around

27:37

this time, and a SPAC, a special purpose

27:39

acquisition company, is a vehicle

27:42

a wait for investors

27:45

investment companies to take companies

27:47

public without going through the usual

27:50

process of filing with the Securities

27:52

and Exchange Commission themselves and

27:55

subjecting themselves to all sorts of internal

27:58

disclosures about a company. Removes

28:00

that by I'm simplifying here, but it

28:02

removes that process by one step, allowing

28:05

a blank check company essentially

28:07

to raise money and say, you know, if you invest

28:10

with us, we will use your money to buy

28:12

at least one or more companies,

28:14

and we have a track record of investments

28:16

and if you trust us, we'll go find something

28:19

and take it public, and your investment

28:21

in US will increase, you know, doubles but

28:23

whatever, but we will increase. So the

28:25

special purpose acquisition companies are the ones

28:27

that go public. So once Trump

28:29

announced he was going to have his own social

28:32

media company, that was obviously a

28:34

desirable target, you know, for any

28:36

special purpose acquisition company because you

28:39

know, name recognition, the

28:41

former president of the United States, possibly future

28:43

president of the United States. It was very attractive.

28:45

So Digital World Acquisition Corporation

28:49

was established by a guy named Patrick Orlando,

28:51

and it went public in September twenty

28:54

twenty one, and its statements,

28:56

according to filings to potential

28:58

investors, it had not entered into any discussions

29:01

with any entity. It was a blank check company that was going

29:03

to scan the horizon and look for good investments.

29:06

And when public as was successful, and

29:08

shortly thereafter there was an announcement that

29:10

it was going to bring Trump Media Technology

29:12

Group public. So that's the origin story

29:14

in twenty twenty one of what we're now seeing playing

29:17

out.

29:17

Let's talk about some of the lawsuits.

29:20

Several involve Patrick Orlando,

29:23

the x CEO and I think still current director

29:25

of Digital World.

29:26

Acquisition now it's DJT. It's

29:29

Trump Media Technology Group, but it's it's trading

29:31

tickers DJT on the terminal, were

29:33

they and everything so right?

29:36

When d WAK went public. When the Digital

29:38

World Acquisition Company went public, it's primary

29:40

sponsor was a fund called ARC

29:43

Global Investments. But our Global

29:45

Investments is basically Patrick Orlando's

29:47

fund. He's the managing partner

29:49

in it. So he was the principal

29:52

investor that helped bring Digital

29:54

World Acquisition public, and therefore

29:57

he became, after it succeeded

29:59

in its IPO, the chairman and chief executive

30:01

officer. He lasted in that job until

30:03

early twenty twenty three when he was

30:05

fired, and he was fired because

30:08

the Securities and Exchange Commission was investigating

30:10

him and Digital World Acquisition

30:12

Company because it had uncovered

30:14

evidence that Patrick Orlando, before

30:17

de WAC went public, had been negotiating

30:19

or at least expressed interest in buying Trump

30:21

Media Technology Group. And it's

30:23

not so much that that was doing something wrong

30:26

as much as in its disclosures

30:28

in order to go public, d WACK had said it

30:30

had not committed to anything or any discussions

30:33

with any other party, you know, but invest

30:35

here and then we will go find after this,

30:38

you know, go seek out acquisitions. And

30:40

that was patently false because he had

30:42

in fact negotiated or at least had discussions

30:44

with the Trump Media Organization to

30:46

take that public. So the SEC investigation

30:49

led to an eighteen million dollars settlement with the company. Patrick

30:51

Orlando was outed a CEO, but not

30:54

as a board member. He got to stay on

30:57

and he was going to stay on, and the plan was

30:59

until such time as d WAC did in fact

31:01

make an acquisition, and after a couple of years

31:04

it finally close this spring. On

31:06

March twenty second was the date for

31:08

shareholders, including our global investments,

31:11

to vote whether or not to approve the

31:13

deal with Trump Media Technology Group. So

31:15

that's step two.

31:16

That was a drop dead date, March twenty second.

31:19

Yes, right, And there's some leverage here on

31:21

several of the parties here. If the vote

31:23

didn't occur, or if it went the wrong way, then

31:26

Digital World Acquisition Group would

31:28

be obligated to liquidate, in other words,

31:30

would turn the funds to investors. These special

31:32

purpose acquisition companies don't go on forever.

31:34

When they go public and raise money,

31:37

they have a timetable and it's much shorter than

31:39

the period here, but there were several delays that extended

31:41

it, and if nothing happened by March twenty

31:43

second, then d WAC would have to basically

31:46

return share funds to his investing

31:48

partners and miss out in this opportunity to

31:51

take Trump Media public.

31:53

Now, at this point, as you write

31:55

in your piece, the lawsuits

31:57

began to fly.

32:00

One of the lawsuits stopped the

32:02

merger.

32:03

Correct As this date was approaching,

32:05

several lawsuits were filed. Several of them

32:07

involved Patrick Orlando. So for one,

32:09

Digital World Acquisition Corps sued

32:12

him because it was clear that

32:14

in his role as director. According to

32:16

d Whack, they claimed that he was basically

32:20

subverting the acquisition process,

32:22

not jettising it, but subverting it

32:24

in such a way as to favor himself. He wanted a

32:26

better you know, set of shares or a better

32:29

conversion ratio for our Global

32:31

Investments holdings in d

32:33

WHAC. In the post conversion deal

32:36

with Trump Media, d WHAC had determined

32:38

that at least from day one, once

32:40

the vote went through and then the acquisition occurred,

32:43

that holders including our Global would get

32:45

one point three to four shares

32:47

in the new company what became DJT

32:50

for every one share they already held in d WHACK,

32:52

or Orlando had signaled as a board member that he

32:54

thought you'd much higher, as high as one point

32:56

eight. So there was clearly going to be a battle

32:59

over this in the last weeks leading up to the

33:01

vote. So d WAC suit him

33:03

preemptively in Florida in mid

33:05

February. He responded by filing

33:08

your countersuit, if you will in Delaware by

33:10

the end of February, saying no, it should

33:12

be one point seven eight to one. You guys have miscalculated.

33:15

You made misstatements about me, et cetera, et cetera.

33:18

So that's the beginning of this. Patrick Orlando

33:20

sued d WHAC for payment

33:22

of legal fees because he was racking up legal bills

33:24

because of the SEC investigation, and it

33:27

was clear from one of d WAC's lawsuits that the

33:29

SEC was going to investigate and quite

33:31

possibly bring a civil charge against Orlando

33:33

for making those misstatements about Trump

33:36

media and the run up to the IPO, and

33:38

that was resolved beforehand, so presumably

33:41

de WHAC did pay much,

33:43

if not all, of the legal expenses that

33:45

Patrick Orlando incurred as the director

33:47

of d WHAC for the SEC investigation.

33:50

So the suit by the Trump Media

33:52

co founders, the former contestants

33:54

on The Apprentice.

33:55

Yes, was that part of the d WAC suit.

33:57

I mean it's also about contention.

34:00

Is that Trump was trying to dilute

34:02

their stake.

34:03

Yes, it's related insofar as there was going to

34:05

be a transition. You know, they helped found this

34:07

company in twenty twenty one, so they thought

34:09

their stake was worth x or that was their understanding

34:12

in early documents. But over time,

34:14

you know, as the company got a little more mature or

34:16

approached this date of acquisition,

34:19

they learned that their shares were worth less than

34:21

what they believed. So they sued. And

34:23

again, part of this was not only to

34:25

get a larger cut of the share

34:28

to which they felt they deserved, but with

34:30

the deal coming up, it's a potential point

34:32

of leverage that we want more or

34:34

else. I'm not sure they could you know, undermined or

34:36

they could get it delayed further. So

34:39

that was resolved that the Delaware Chance re Court

34:42

judge overseeing that matter. No, he

34:44

was not going to postpone or

34:46

force this March twenty second vote

34:48

to be rescheduled, but would

34:50

simply sort out the issue of ownership

34:52

afterwards, because there'd be a large chunk of unallocated

34:55

shares in the wake of the March twenty second

34:58

acquisition.

34:58

So now Trump has countersuit,

35:01

but in Florida. And here's my favorite

35:03

part. The judge Samuel

35:05

Glascock the third said he was gobsmacked

35:08

to learn of Trump's Florida suit, which

35:11

he filed there instead of bringing counter claims

35:13

in the Delaware suit, and that he would

35:15

consider possible sanctions against the

35:18

former president.

35:19

Yes, Judge Glascock, I've seen him.

35:21

He's excellent. And there's real rules

35:24

regarding Delaware chance record and a

35:26

pattern of the way you prosecute or litigate

35:28

things. And this was clearly stepping out of something

35:31

that was brought in chance record, trying

35:33

to drag it down to Florida. So we'll see what happens.

35:35

But he did not earn any favors

35:38

Trump's lawyers by suing Florida rather

35:40

than taking this or dealing

35:42

with this in chance record.

35:44

And then also there's

35:46

an insider trading case.

35:48

Where yes, if that weren't enough, exactly.

35:51

It's crazy.

35:52

There's civil litigation between the

35:54

parties, the sec bringing

35:56

suits and the Manhattan US

35:58

attorney bringing a criminal.

36:00

Case, so over and above

36:03

the current spat, you know, different

36:05

legal questions about who owns how much

36:07

of the now the new company DJT. Is

36:10

this other fact that one

36:12

of the early investors, Bruce Corellik,

36:14

who was affiliated with Rocket Mortgage,

36:17

learned and was aware of before

36:19

the public became aware of d wax

36:21

interest in doing a deal with Trump Media. Now that's

36:23

valuable information. If you've got a blank check

36:25

company and they haven't decided where to spend their money,

36:28

it's worth whatever it's worth. If

36:30

you happen to know before it's announced that no, they're

36:32

going to do a deal for Donald Trump's media

36:34

company, a very high profile, almost

36:37

can't miss kind of bat, then

36:39

that's worth something. And the Justice

36:41

Department accused him and a couple of

36:44

confederates who we knew through Rocket Mortgage,

36:46

the Schwartzmann brothers, of

36:48

insider trading, misappropriating the

36:50

information about this, sharing it

36:52

with friends, and then trading on it, buying more

36:55

de wax shares, and then selling the de Wax shares

36:57

wants. The news about its plan to acquire

36:59

Trump Technology Group came

37:01

out and all three you know, were

37:04

determined to fight it. They pled not guilty. But

37:06

you know, just last week or two weeks ago, the Schwarzman

37:09

brothers both changed their pleat guilty, So

37:11

you know, Gorillic hasn't. But now

37:13

he's in a little bit of trouble. Not only

37:15

has he been charged with the inside of trading, but

37:18

two men who the government alleges

37:20

he shared this with, have both pled guilty.

37:22

So we'll see what happens with his case. But

37:25

yes, it has nothing directly

37:27

to do with Trump, but it's it's not a good fact

37:29

pattern if you're trying to launch a company

37:31

that this has happened in the background, and this helped

37:33

delay the launch of the company.

37:35

And just what is DJT word?

37:37

There have been these wild swings

37:40

in the shares and it's a company

37:43

that's never generated a profit

37:45

yet it's worth billions.

37:47

Not only no profit, but it's barely

37:50

generated any revenue and it's created losses.

37:52

That's what we've seen in its first public filings

37:54

after this acquisition. But you know,

37:57

you and I grew up in a world where people

37:59

who pick stocks, you know, obsessed over

38:01

the fundamentals, how much money you would generate,

38:03

and you know this is why you bought a company and had

38:05

a brand value, et cetera. We're in a different

38:07

world now of meme stocks, and I

38:10

think this is actually ingenious. You know, on Trump's

38:12

half, he has a bunch of MAGA supporters.

38:14

You know, his his real ardent fans who

38:16

do put their money with their mouth is they buy his merchandise,

38:19

They support him, they give him money. And this is a way

38:21

of giving money to him as well, whether or not

38:23

they can keep the stock up at its level even

38:25

though it doesn't have the underlying revenues to

38:28

justify it at this time. I remember, growing

38:30

up in the Boston area, at some point in the nineteen eighties,

38:33

a group of investors took the

38:35

Boston Celtics public. Now, the Celtics

38:37

were at the height of their fame

38:39

and success in the nineteen eighties with Larry Bird,

38:41

and it was a stock play, like, you know,

38:43

let's get a lot of Boston Celtics fans and

38:46

Boston sports fans, you know, get them

38:48

to buy into it. It was not ultimately

38:50

a success, but I see on

38:53

a much larger scale sort of a similar enticement

38:55

here. You know, Trump has tens of millions

38:58

of passionate supporters and

38:59

ask to buy sheriff stock for forty

39:01

or fifty bucks or whatever. Who knows. If

39:04

he mobilizes them, you know what he

39:06

could get them to do.

39:07

Well, they want to buy his four hundred dollars sneakers.

39:09

They're sold out. They buy

39:11

the mugs, the T shirts and everything

39:13

else. So we shall see.

39:15

This is interesting. This gets us away from,

39:17

like I say, fundamental stock

39:20

analysis and what the return on investment

39:22

be too, Like, no, this is what you know.

39:24

Frump's passionate supporters might run

39:26

up. We'll see. This will be an interesting

39:28

test case. There will be some kind of a business

39:31

school case study probably and.

39:34

Maybe law school too.

39:35

We'll see, yes, yes, maybe, Thanks.

39:37

So much, Greg for unraveling all these

39:39

lawsuits. That's Bloomberg Legal reporter

39:42

Greg Ferrell, and that's it for this edition

39:44

of the Bloomberg Law Podcast. Remember

39:46

you can always get the latest legal news by

39:48

subscribing and listening to the show on

39:50

Apple Podcasts, Spotify, and

39:52

at Bloomberg dot com, slash podcast,

39:55

slash Law.

39:56

I'm June Grosso and this is

39:58

Bloomberg f