Former President Donald Trump has been charged with a litany of crimes over the past several months, but his status as defendant-in-chief has now been immortalized by a mug shot.
For those who believe Trump broke the law by arranging hush-money payments to a porn star, stealing classified documents, instigating a riot and trying to steal the 2020 election, the photo serves as a symbol of his criminal behavior. To the people who see Trump as the victim of politically-motivated prosecutions, the image signals that the nation’s legal system has been compromised by partisanship.
Either way, Trump’s mug shot marks a new era for American political scandal.
Of course, Trump joins a long list of American politicians who have found themselves facing prosecution.
From the founding of the republic to the current day, politicians being accused of wrongdoing has been an American tradition. The scope of cases runs across the political spectrum and the charges have ranged from sex scandals to bribery.
Trump’s summer of scandal began in New York, where Manhattan District Attorney Alvin Bragg charged him with campaign-finance violations, claiming the former president made hush-money payments to a porn star and Playboy bunny to bury their stories of having had affairs with him. He was then hit with federal charges of illegally withholding classified documents at his Florida mansion after leaving office and for illegally working to disrupt the formal counting of the votes in Congress that confirmed his loss in the 2020 election.
But it took until Trump’s fourth indictment on state charges in Georgia, alleging that he and 18 others conspired to illegally overturn the 2020 election in which he narrowly lost the state to Biden, for a mugshot to formally appear.
Here’s a list of some recent, well-known politicians who have been arrested:
Rod Blagojevich
(U.S. Marshals Service)
Blagojevich served as the Democratic governor of Illinois from 2003 until 2009 when he was arrested, impeached and eventually sentenced to 14 years in prison for corruption.
The case revolved around a “pay-for-play” scandal in which Blagojevich solicited a bribe in return for appointing someone to fill the U.S. Senate seat vacated by Barack Obama after he’d been elected president.
Blagojevich was released in 2020 after Trump commuted his sentence.
John Edwards
(U.S. Marshals Service)
The former Democratic vice presidential and presidential candidate was indicted in 2011 on charges that he used campaign money to cover up an extramarital affair and to pay to support a child that was born as a result. Edwards wasn’t convicted but the revelation that he had an affair while his wife was dying of cancer ended his political career.
Tom DeLay
(Harris County Sheriff’s Office)
The onetime Republican House majority leader was indicted in 2005 by a Texas grand jury on campaign-finance and money-laundering charges. He stepped down as House speaker and opted not to seek reelection the following year. He was eventually convicted and sentenced to three years in prison but had the case overturned on appeal.
John Mitchell
(U.S. Marshals Service)
The U.S. attorney general under President Richard Nixon served 19 months in prison for his role in helping plan and orchestrate the break-in of the Democratic Party’s national headquarters at the Watergate Hotel. The scandal would lead to Nixon’s resignation in 1974.
Dennis Hastert
(Lake County Sheriff’s Office)
The Republican speaker of the House of Representatives from 1999 until 2007 was later sentenced to 15 months in prison for sexually abusing young boys while working as a high school teacher and coach in his home state of Illinois. At the time of his conviction in 2015, Hastert was the highest-ranking U.S. politician to ever be sentenced to prison time.
Former President Donald Trump was criminally indicted by a grand jury in Georgia’s Fulton County on Monday night in connection with a probe into his efforts to overturn the state’s results in the 2020 presidential election.
The 41-count indictment against Trump and 18 of his associates, including Trump attorney Rudy Giuliani, then-White House chief of staff Mark Meadows and Trump adviser John Eastman, was handed to a judge in Atlanta around 9 p.m. Eastern after a daylong session by the Fulton County grand jury, and the details…
U.S. prosecutors have called an offsides on the British billionaire owner of Tottenham Hotspur soccer team, charging him with a “brazen insider-trading scheme,” in which he passed secret stock tips worth millions to his girlfriends, private pilots and assistants for years.
Joe Lewis, 86, who is one of the richest people in the United Kingdom, is accused of taking inside information about companies in which he was a large investor and handing it out to people around him for them to use to get rich.
“Notwithstanding his vast personal wealth, Lewis provided the inside information to his employees, romantic partners, and friends as a way to give them compensation and gifts,” federal prosecutors wrote in an indictment filed in New York.
Prosecutors say Lewis, who Forbes has estimated to be worth $6.1 billion, carried on with the scheme from 2013 through 2021, helping his employees and friends make millions of dollars in illicit gains.
Some people who benefited from Lewis’ loose lips included staff on his private, $250 million super yacht, the Aviva.
In some cases, prosecutors allege Lewis gave his pilots short-term, $500,000 loans to buy stock and then pay him back after they scored big based on his tips.
“Thanks to Lewis, those bets were a sure thing,” said Damian Williams, the U.S. attorney for the Southern District of New York. “That’s classic corporate corruption. It’s cheating and it is against the law.”
Lewis’ private equity company, Tavistock Group, has investments in hundreds of companies ranging from agriculture, sports, resort properties and life-sciences businesses. The firm owns works of art by painters like Pablo Picasso, Henri Matisse and Gustav Klimt.
Investigators say Lewis shared information about publicly-traded life-science groups Solid Biosciences SLDB, +0.88%
and Mirati Therapeutics MRTX, -2.43%,
as well as beef producer Australian Agricultural Co. AAC, -2.79%
and a special purpose acquisition company, BCTG.
Prosecutors also allege that he hid how much of a stake he owned in cancer therapeutics company Mirati “through a pattern of false filings and misleading statements” in order to manipulate markets.
A message sent to representatives of Tavistock wasn’t immediately returned.
Making his fortune as a currency trader, Lewis became more widely known when he acquired the Tottenham football club in 2001 for $35.5 million.
He has lived as a tax exile in the Bahamas for years.
ROME (AP) — Silvio Berlusconi, the boastful billionaire media mogul who was Italy’s longest-serving premier despite scandals over his sex-fueled parties and allegations of corruption, died, Italian media reported Monday. He was 86.
Italian news agency LaPresse reported Berlusconi’s death after he was hospitalized on Friday for the second time in months for treatment of chronic leukemia.
Berlusconi was hospitalized in Milan on April 5 with a lung infection stemming from the disease, said Dr. Alberto Zangrillo, his personal physician. He also suffered over the years from heart ailments, prostate cancer and was hospitalized for COVID-19 in 2020.
A onetime cruise ship crooner, Berlusconi used his television networks and immense wealth to launch his long political career, inspiring both loyalty and loathing.
To admirers, the three-time premier was a capable and charismatic statesman who sought to elevate Italy on the world stage. To critics, he was a populist who threatened to undermine democracy by wielding political power as a tool to enrich himself and his businesses.
His Forza Italia political party was a coalition partner with current Premier Giorgia Meloni, a far-right leader who came to power last year, although he held no position in the government.
Silvio Berlusconi, Giorgia Meloni (C), Matteo Salvini and other members of right-wing coalition speak to the media on October 21, 2022 in Rome, Italy.
Getty Images
His friendship with Russian President Vladimir Putin put him at odds with Meloni, a staunch supporter of Ukraine. On his 86th birthday, while the war raged, Putin sent Berlusconi best wishes and vodka, and the Italian boasted he returned the favor by sending back Italian wine.
As Berlusconi aged, some derided his perpetual tan, hair transplants and live-in girlfriends who were decades younger. For many years, however, Berlusconi seemed untouchable despite the personal scandals.
Criminal cases were launched but ended in dismissals when statutes of limitations ran out in Italy’s slow-moving justice system, or he was victorious on appeal. Investigations targeted the tycoon’s steamy so-called “bunga bunga” parties involving young women and minors, or his businesses, which included the soccer team AC Milan, the country’s three biggest private TV networks, magazines and a daily newspaper, and advertising and film companies.
Karima El-Mahroug, a.k.a. Ruby (C), reacts as members of the media approach on February 15, 2023 at a Milan special courthouse, following a court decision acquitting Berlusconi of bribing witnesses to lie about his “bunga bunga” parties in an underage prostitution case.
AFP via Getty Images
Only one led to a conviction — a tax fraud case stemming from a sale of movie rights in his business empire. The conviction was upheld in 2013 by Italy’s top criminal court, but he was spared prison because of his age, 76, and was ordered to do community service by assisting Alzheimer’s patients.
He still was stripped of his Senate seat and banned from running or holding public office for six years, under anti-corruption laws.
He stayed at the helm of Forza Italia, the center-right party he created when he entered politics in the 1990s and named for a soccer cheer, “Let’s go, Italy.” With no groomed successor in sight, voters started to desert it.
He eventually held office again -– elected to the European Parliament at age 82 and then last year to the Italian Senate.
Berlusconi’s party was eclipsed as the dominant force on Italy’s political right: first by the League, led by anti-migrant populist Matteo Salvini, then by Meloni’s Brothers of Italy party, with its roots in neo-fascism. Following elections in 2022, Meloni formed a governing coalition with their help.
He suffered personal humiliations as well. Berlusconi lost his standing as Italy’s richest man, although his sprawling media holdings and luxury real estate still left him a billionaire several times over.
In 2013, guests at one of his parties included an under-age Moroccan dancer whom prosecutors alleged had sex with Berlusconi in exchange for cash and jewelry. After a trial spiced by lurid details, a Milan court initially convicted Berlusconi of paying for sex with a minor and using his office to try to cover it up. Both denied having sex with each other, and he was eventually acquitted.
The Catholic Church, at times sympathetic to his conservative politics, was scandalized by his antics, and his wife of nearly 20 years divorced him, but Berlusconi was unapologetic, declaring: “I’m no saint.”
Berlusconi insisted that voters were impressed by his brashness.
“The majority of Italians in their hearts would like to be like me and see themselves in me and in how I behave,” he said in 2009, during his third and final stint as premier.
His second term, from 2001-06, was perhaps his golden era, when he became Italy’s longest-serving head of government and boosted its global profile through his friendship with U.S. President George W. Bush. Bucking widespread sentiment at home and in Europe, Berlusconi backed the U.S.-led war in Iraq.
As a businessman who knew the power of images, Berlusconi introduced U.S.-style political campaigns — with big party conventions and slick advertising — that broke with the gray world of Italian politics, in which voters essentially chose parties and not candidates. His rivals had to adapt.
Berlusconi saw himself as Italy’s savior from what he described as the Communist menace — years after the Berlin Wall fell. From the start of his political career in 1994, he portrayed himself as the target of a judiciary he described as full of leftist sympathizers. He always proclaimed his innocence.
When the anti-establishment 5-Star Movement gained strength, Berlusconi branded it as a menace worse than Communism.
His close friendship with longtime Socialist leader and former Premier Bettino Craxi was widely credited for helping him become a media baron. Still, Berlusconi billed himself as a self-made man, saying, “My formula for success is to be found in four words: work, work and work.”
He boasted of his libido and entertained friends and world leaders at his villas. At one party, newspapers reported the women were dressed as “little Santas.” At another, photos showed topless women and a naked man lounging poolside.
“I love life! I love women!” an unrepentant Berlusconi said in 2010.
He occasionally selected TV starlets for posts in his Forza Italia party. “If I weren’t married, I would marry you immediately,” Berlusconi reportedly said in 2007 to Mara Carfagna, who later became a Cabinet minister. Berlusconi’s wife publicly demanded an apology.
Berlusconi was nicknamed “Papi” — or “Daddy” — by an aspiring model whose 18th birthday bash he attended, also to his wife’s irritation. Later, self-described escort Patrizia D’Addario said she spent the night with him on the evening that Barack Obama was elected U.S. president in 2008.
From his cruise ship entertainer days, Berlusconi loved to compose and sing Neapolitan songs. Like millions of Italians, he had a passion for soccer, and often was in the stands at AC Milan.
He delighted in flouting political etiquette. He sported a bandanna when hosting British Prime Minister Tony Blair at his estate on the Emerald Coast of Sardinia, and it was later revealed he was concealing hair transplants. He posed for photos at international summits making an Italian gesture — which can be offensive or superstitious, depending on circumstances — in which the index and pinkie fingers are extended like horns.
US President Barack Obama (R) speaks with Italy’s Prime Minister Silvio Berlusconi during a meeting at the G8 Summit at Deerhurst Resort in Huntsville, Ontario, on June 26, 2010.
AFP via Getty Images
He stirred anger after the Sept. 11, 2001, terrorist attacks in the United States by claiming Western civilization was superior to Islam.
When criticized in 2003 at the European Parliament by a German lawmaker, Berlusconi likened his adversary to a concentration camp guard. Years later, he drew outrage when he compared his family’s legal woes to what Jews must have encountered in Nazi Germany.
Berlusconi was born in Milan on Sept. 29, 1936, the son of a middle-class banker. He earned a law degree, writing his thesis on advertising. He started a construction company at 25 and built apartment complexes for middle-class families on Milan’s outskirts, part of a postwar boom.
But his astronomical wealth came from the media. In the late 1970s and 1980s, he circumvented Italy’s state TV monopoly RAI by creating a de facto network in which local stations all showed the same programming. RAI and his Mediaset network accounted for about 90% of the national market in 2006.
When the “Clean Hands” corruption scandals of the 1990s decimated the political establishment that had dominated postwar Italy, Berlusconi filled the void, founding Forza Italia in 1994.
His first government in 1994 collapsed after eight months when an ally who led an anti-immigrant party yanked support. But aided by an aggressive campaign that included mass mailings of glossy magazines recounting his success story, Berlusconi swept to victory in 2001.
Shuffling his Cabinet occasionally, he stayed in power for five years, setting a record for government longevity in Italy. It wasn’t easy.
A Group of Eight summit he hosted in Genoa in 2001 was marred by violent anti-globalization demonstrations and the death of a protester shot by a police officer. Berlusconi faced fierce domestic opposition and alienated some allies by sending 3,000 troops to Iraq after the ouster of Saddam Hussein in 2003. For a time, Italy was the third-largest contingent in the U.S. coalition.
At home, he constantly faced accusations of sponsoring laws aimed at protecting himself or his businesses, but he insisted he always acted in the interest of all Italians. Legislation passed when he was premier allowing officeholders to own media businesses but not run them was deemed by his critics to be tailor made for Berlusconi.
An admirer of U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher, Berlusconi passed reforms that partially liberalized the labor and pension systems, among Europe’s most inflexible. He also was chummy with Putin, who stayed at his Sardinian estate, and he visited the Russian leader, notably going to Crimea after Moscow illegally annexed the peninsula in 2014.
In 2006, as Italy was ridiculed as “the sick man of Europe,” with its economy mired in zero growth and its budget deficit rising, Berlusconi narrowly lost the general election to center-left leader Romano Prodi, who had been president of the European Union Commission.
In 2008, he bounced back for what would be his final term as premier. It ended abruptly in 2011, when financial markets lost faith in his ability to keep Italy from succumbing to the eurozone’s sovereign debt crisis. To the relief of economic powerhouse Germany, Berlusconi reluctantly stepped down.
Health concerns dogged him over the years. He underwent surgery for prostate cancer in 1997. In November 2006, he fainted during a speech, and the next month flew to the U.S., where he received a pacemaker at the Cleveland Clinic. He underwent more heart surgery in 2016.
During a political rally in 2009, a man threw a souvenir statuette of Milan’s cathedral at Berlusconi, fracturing his nose, cracking two teeth and cutting his lip.
Berlusconi was first married in 1965 to Carla Dall’Oglio, and their two children, Marina and Piersilvio, were groomed to hold top positions in his business empire. He married his second wife, Veronica Lario, in 1990, and they had three children, Barbara, Eleonora and Luigi.
The Texas House of Representatives voted Saturday to impeach scandal-plagued Republican Attorney General Ken Paxton, triggering his immediate suspension from duties and setting up a trial that could permanently remove the state’s top lawyer from office.
The 121-23 vote constitutes an abrupt downfall for one of the GOP’s most prominent legal combatants, who in 2020 asked the U.S. Supreme Court to overturn President Joe Biden’s electoral defeat of Donald Trump. It makes Paxton only the third sitting official in Texas’ nearly 200-year history to have been impeached.
The historic vote came after a months-long House investigation into the three-term attorney general that resulted in 20 charges alleging sweeping abuses of power, including obstruction of justice, bribery and abuse of public trust.
Paxton, 60, is just the third sitting official to be impeached in the state’s nearly 200-year history.
The House is controlled by Republicans and the matter now moves to the Republican-controlled state Senate. A two-thirds vote by the 31-member Senate would be enough to remove him from office.
Paxton’s wife, two-term state Sen. Angela Paxton, could be among those casting a vote on her husband’s political future.
Paxton has criticized the impeachment effort as an attempt to “overthrow the will of the people and disenfranchise the voters of our state.” He has said the charges are based on “hearsay and gossip, parroting long-disproven claims.”
Texas’ Republican-led House of Representatives launched historic impeachment proceedings against Attorney General Ken Paxton earlier on Saturday as Donald Trump defended the scandal-plagued GOP official from a vote that could lead to his ouster.
The House convened in the afternoon to debate whether to impeach and suspend Paxton over allegations of bribery, abuse of public trust and that he is unfit for office — just some of the accusations that have trailed Texas’ top lawyer for most of his three terms.
The hearing set up what could be a remarkably sudden downfall for one of the GOP’s most prominent legal combatants, who in 2020 asked the U.S. Supreme Court to overturn President Joe Biden’s electoral defeat of Trump.
Paxton, 60, has decried what he called “political theater” based on “hearsay and gossip, parroting long-disproven claims,” and said it’s an attempt to disenfranchise voters who reelected him in November. It’s unclear where the attorney general was Saturday, but during the House proceeding he was sharing statements from supporters on Twitter.
“No one person should be above the law, least not the top law enforcement officer of the state of Texas,” Rep. David Spiller, a Republican member of the committee that investigated Paxton, said in opening statements.
Rep. Ann Johnson, a Democratic member, told lawmakers that Texas’ “top cop is on the take.” Rep. Charlie Geren, a Republican committee member, said without elaborating that Paxton had called lawmakers and threatened them with political “consequences.”
As the articles of impeachment were laid out, some of the lawmakers shook their heads.
Paxton has been under FBI investigation for years over accusations that he used his office to help a donor and was separately indicted on securities fraud charges in 2015, though he has yet to stand trial. Until this week, his fellow Republicans had taken a muted stance on the allegations.
Lawmakers allied with Paxton tried to discredit the investigation by noting that hired investigators, not panel members, interviewed witnesses. They also said several of the investigators had voted in Democratic primaries, tainting the impeachment, and that they had too little time to review evidence.
“I perceive it could be political weaponization,” said Rep. Tony Tinderholt, one of the House’s most conservative members. Republican Rep. John Smithee compared the proceeding to “a Saturday mob out for an afternoon lynching.”
Impeachment requires just a simple majority in the House.
Texas’ top elected Republicans had been notably quiet about Paxton this week. But on Saturday both Trump and U.S. Sen. Ted Cruz came to his defense, with the senator calling the impeachment process “a travesty” and saying the attorney general’s legal troubles should be left to the courts.
“Free Ken Paxton,” Trump wrote on his social media platform Truth Social, warning that if House Republicans proceeded with the process, “I will fight you.”
Abbott, who lauded Paxton while swearing him in for a third term in January, has remained silent. The governor spoke at a Memorial Day service in the House chamber about three hours before the impeachment proceedings began.
Republican House Speaker Dade Phelan also attended but the two appeared to exchange few words, and Abbott left without commenting to reporters.
In one sense, Paxton’s political peril arrived with dizzying speed: The House committee’s investigation came to light Tuesday, and by Thursday lawmakers issued 20 articles of impeachment.
But to Paxton’s detractors, the rebuke was years overdue.
In 2014, he admitted to violating Texas securities law, and a year later he was indicted on securities fraud charges in his hometown near Dallas, accused of defrauding investors in a tech startup. He pleaded not guilty to two felony counts carrying a potential sentence of five to 99 years.
He opened a legal defense fund and accepted $100,000 from an executive whose company was under investigation by Paxton’s office for Medicaid fraud.
An additional $50,000 was donated by an Arizona retiree whose son Paxton later hired to a high-ranking job but was soon fired after displaying child pornography in a meeting.
In 2020, Paxton intervened in a Colorado mountain community where a Texas donor and college classmate faced removal from his lakeside home under coronavirus orders.
But what ultimately unleased the impeachment push was Paxton’s relationship with Austin real estate developer Nate Paul.
In 2020, eight top aides told the FBI they were concerned Paxton was misusing his office to help Paul over the developer’s unproven claims that an elaborate conspiracy to steal $200 million of his properties was afoot.
The FBI searched Paul’s home in 2019, but he has not been charged and denies wrongdoing. Paxton also told staff members he had an affair with a woman who, it later emerged, worked for Paul.
The impeachment accuses Paxton of attempting to interfere in foreclosure lawsuits and issuing legal opinions to benefit Paul. Its bribery charges allege that Paul employed the woman with whom Paxton had an affair in exchange for legal help and that he paid for expensive renovations to the attorney general’s home.
A senior lawyer for Paxton’s office, Chris Hilton, said Friday that the attorney general paid for all repairs and renovations.
Other charges, including lying to investigators, date back to Paxton’s still-pending securities fraud indictment.
Four of the aides who reported Paxton to the FBI later sued under Texas’ whistleblower law, and in February he agreed to settle the case for $3.3 million. The House committee said it was Paxton seeking legislative approval for the payout that sparked their probe.
“But for Paxton’s own request for a taxpayer-funded settlement over his wrongful conduct, Paxton would not be facing impeachment,” the panel said.
Federal prosecutors have leveled a legal dropkick on former pro wrestler Ted DiBiase Jr., charging him with stealing millions of dollars meant to feed needy kids in a Mississippi scandal that has also tarnished the reputation of NFL hall of famer Brett Favre.
From the archives (September 2022): NFL star Brett Favre and Gov. Phil Bryant texted about how to use $5 million of welfare funds to build a new volleyball stadium
Some clarity is emerging regarding statements from Biden administration officials that no one making less than $400,000 will see higher audit rates by the Internal Revenue Service, which is about to step up its scrutiny of wealthy taxpayers.
The Inflation Reduction Act — the tax and climate package enacted last summer — earmarked $80 billion for the IRS over the next decade and a half. The money is intended in part to facilitate more audits of corporations and wealthier individuals.
Ahead of the bill’s passage, Treasury Secretary Janet Yellen pledged that there would be no increase in the audit rate for households and small businesses with annual incomes below $400,000 “relative to historical levels.”
But Republican critics and other observers have asked what “historical levels” might actually mean.
The audit rate on returns for tax year 2018 is the reference point to keep in mind, IRS Commissioner Danny Werfel told senators on Wednesday. He emphasized that “there’s no surge coming for workers, retirees and others.”
The IRS audited fewer than 1% of 2018 returns with total positive incomes — the sum of all positive amounts shown for various sources of income reported on an individual income-tax return, which excludes losses — of between $1 and $500,000, according to statistics that the tax agency released last week.
The agency has three years to start an audit from the time it receives a return.
The numbers show that 0.4% of returns for taxpayers earning up to $25,000 were audited. That figure was 0.3% for returns between $200,000 and $500,000 and more than 9% for returns over $10 million, the IRS data show. Six years earlier, more than 13% of returns over $10 million were scrutinized, according to the IRS.
“Help us with understanding what the words ‘historic level’ means,” Sen. James Lankford, a Republican from Oklahoma, asked Werfel during a Wednesday budget hearing.
“We will take the most recent final audit rate, and it’s historically low … and we allow that to be the marker for least several years, and then we’re revisit it,” Werfel said. The 2018 audit rates were the newest final rates, he added.
“So the 2018 number is what it’s going to be?” Lankford asked.
“Yes,” Werfel replied.
“Werfel’s explanation that 2018 audit levels will be the reference point is the most detail I’ve heard so far,” Erica York, s senior economist at the Tax Foundation, told MarketWatch. “He did seem to leave open the possibility of revisiting the reference year for ‘historical’ in the future,” she added.
Another open question has been how the $400,000 income threshold will be determined. Months after the Inflation Reduction Act passed, IRS and Treasury officials still hadn’t finalized what counted as $400,000 in income, according to a January Treasury Department watchdog report.
“How are you arriving at this number?” asked Sen. Marsha Blackburn, a Republican from Tennessee. Blackburn’s state has many self-employed entrepreneurs who might appear richer on paper than they actually are, she said. “While they may have a higher gross, their net is very low,” she added.
“We’re going to look at total positive income as our metric,” Werfel said. He later added that “there would be no increased likelihood of an audit if they have less than $400,000 in total positive income.”
The IRS description of total positive income as “the sum of all positive amounts shown for the various sources of income reported on an individual income tax return and, thus, excludes losses” represents, effectively, a tally of income before taxpayers subtract their losses.
Total positive income is a metric the IRS usually applies to categorize audits, the Tax Foundation’s York noted. But one challenge of strict thresholds for more audits, she said, “is that it creates incentives for underreporting income” to stay under the line.
Compared with recent years, there are now more specifics about how the IRS will implement additional audits of higher-income taxpayers, said Janet Holtzblatt, a senior fellow at the Tax Policy Center.
“But still there are questions,” she noted, about how the agency will treat situations when taxpayers don’t provide full picture of their income.
After years of investigations and probes into Donald Trump for a wide variety of alleged crimes, a Manhattan grand jury voted Thursday to indict him, marking the first time in U.S. history a former president will face criminal charges.
The indictment has yet to be unsealed so the specifics of the charges weren’t immediately clear, but the Manhattan district attorney has alleged that Trump had broken the law for his role in a hush-money payment to porn star Stormy Daniels at the height of the 2016 presidential election to silence her story claiming they once had an affair. Despite years of various investigations, Trump had so far avoided prosecution.
The New York Times was first to report the indictment, which was confirmed by Trump’s lawyers, Joe Tacopina and Susan Necheles, late Thursday. “President Trump has been indicted,” they said in a statement. “He did not commit any crime. We will vigorously fight this this political prosecution in court.”
In his own statement, Trump called the indictment “political persecution and election interference at the highest level,” and accused Democrats of “cheating” and “weaponizing our justice system.”
In an emailed statement Thursday, a spokesperson for Manhattan District Attorney Alvin Braggs said arrangements are being made for Trump’s surrender: “This evening we contacted Mr. Trump’s attorney to coordinate his surrender to the Manhattan D.A.’s Office for arraignment on a Supreme Court indictment, which remains under seal. Guidance will be provided when the arraignment date is selected.”
There were news reports that Trump would turn himself in next week, and in an email to MarketWatch, Necheles said Trump’s arraignment is expected to be Tuesday.
The hush-money charges mark an extraordinary turn of events for Trump, who has been under investigation for election interference in Georgia and the storage of classified documents at his Florida mansion, as he seeks to make a political comeback with a run for the White House in 2024.
Daniels, whose real name is Stephanie Clifford, was paid $130,000 by Trump’s then-personal lawyer, Michael Cohen, after she had approached the National Enquirer offering to sell her kiss-and-tell story about having sex with Trump at a celebrity golf tournament in 2006.
Clifford then signed a non-disclosure agreement and the National Enquirer never published the story — a tabloid journalism practice known as “catch and kill.”
Cohen initially made the payment using money he took from a home equity loan on his house, and funneled it to Clifford through a shell company he created in Delaware. Cohen, who pleaded guilty in 2018 in federal court to campaign finance violations for his role in the payoff, said he was directed to make the payment by Trump who later reimbursed him.
That payment was recorded by Trump’s company as being for legal services. Federal prosecutors had argued that the payments amounted to illegal, unreported assistance to Trump’s campaign.
Trump was never charged in the federal probe but was listed in court documents as “co-conspirator number one.”
The former president has denied having an affair with Clifford and has characterized her selling the story as extortion.
Cohen had also been involved in orchestrating an earlier “catch-and-kill” payment in 2016 to former Playboy bunny Karen McDougal, who was given $150,000 for her story of having an affair with Trump by the National Enquirer, which then never ran an article.
The editor and publisher of the National Enquirer were given non-prosecution agreements in exchange for their cooperation with the federal investigation.
Trump has been facing an FBI investigation into his keeping boxes of highly classified documents after he left the White House following his defeat by President Joe Biden in 2020. He also has been subject to a grand jury probe into his alleged tampering with the election process in Georgia.
His real estate company, the Trump Organization, has been the subject of a lawsuit by the New York Attorney General’s office for allegedly falsifying business and tax records. The Manhattan district attorney had similarly looked into Trump’s business practices but has so far declined to press charges.
The Manhattan grand jury probing former President Donald Trump’s alleged role in a hush money payment to a porn star is scheduled to break for about a month, reports said Wednesday.
Politico said the break is largely due to a previously scheduled hiatus, citing a person familiar with the proceedings.
Sam Bankman-Fried, the founder and former chief executive of bankrupt crypto exchange FTX, is facing new charges for bribery, according to an indictment on March 28.
It claims Bankman-Fried in 2021 transferred over $40 million worth of cryptocurrency to Chinese government officials. The founder allegedly made the transfer to “influence and induce them to unfreeze the accounts” of Alameda Research, which contained over $1 billion in cryptocurrency that Beijing had frozen, according to the document.
The indictment contains 12 charges that Bankman-Fried previously was facing, plus the additional one for conspiracy to violate the Foreign Corrupt Practices Act, bringing the new tally to a 13-count indictment.
Bankman-Fried’s lawyer didn’t immediately respond to a MarketWatch request for comment.
Bankman-Fried has been restricted from using messaging apps, but prosecutors and Bankman-Fried’s attorneys have asked U.S. District Judge Lewis Kaplan to approve a new set of proposed restrictions that would limit his access to electronic devices and the internet.
He has pleaded not guilty to eight counts over the collapse of FTX and is currently under house arrest with his parents in Palo Alto, Calif.
U.S. District Judge Lewis Kaplan set a new hearing for Thursday.
Shares of AT&T Inc. were rising in premarket trading Wednesday after the company swung to a loss upon taking restructuring charges, but beat earnings expectations on an adjusted basis and showed continued subscriber growth in its fourth quarter.
The company posted a loss from continuing operations of $23.1 billion, or $3.20 a share, whereas it earned $5.2 billion, or 66 cents a share, a year-earlier. The loss includes $3.57 cents a share of non-cash impairment, abandonment, and restructuring charges, among other factors.
Short selling can be controversial, especially among management teams of companies whose stocks traders are betting that their prices will fall. And a new spike in alleged “naked short selling” among microcap stocks is making several management teams angry enough to threaten legal action:
Taking a long position means buying a stock and holding it, hoping the price will go up.
Shorting, or short selling, is when an investor borrows shares and immediately sells them, hoping he or she can buy them again later at a lower price, return them to the lender and pocket the difference.
Covering is when an investor with a short position buys the stock again to close a short position and return the shares to the lender.
If you take a long position, you might lose all your money. A stock can go to zero if a company goes bankrupt. But a short position is riskier. If the share price rises steadily after an investor has placed a short trade, the investor is sitting on an unrealized capital loss. This is why short selling traditionally has been dominated by professional investors who base this type of trade on heavy research and conviction.
Brokers require short sellers to qualify for margin accounts. A broker faces credit exposure to an investor if a stock that has been shorted begins to rise instead of going down. Depending on how high the price rises, the broker will demand more collateral from the investor. The investor may eventually have to cover and close the short with a loss, if the stock rises too much.
And that type of activity can lead to a short squeeze if many short sellers are surprised at the same time. A short squeeze can send a share price through the roof temporarily.
Short squeezes helped feed the meme-stock craze of 2021 that sent shares of GameStop Corp. GME, +10.45%
and AMC Entertainment Holdings Inc. AMC, +2.54%
soaring early in 2021. Some traders communicating through the Reddit WallStreetBets channel and in other social media worked together to try to force short squeezes in stocks of troubled companies that had been heavily shorted. The action sent shares of GameStop soaring from $4.82 at the end of 2020 to a closing high of $86.88 on Jan. 27, 2021, only for the stock to fall to $10.15 on Feb. 19, 2021, as the seesaw action continued for this and other meme stocks.
Naked shorting
Let’s say you were convinced that a company was headed toward financial difficulties or even bankruptcy, but its shares were still trading at a value you considered to be significant. If the shares were highly liquid, you would be able to borrow them through your broker for little or almost no cost, to set up your short trade.
But if many other investors were shorting the stock, there would be fewer shares available for borrowing. Then your broker would charge a higher fee based on supply and demand.
For example, according to data provided by FactSet on Jan. 23, 22.7% of GameStop’s shares available for trading were sold short — a figure that could be up to two weeks out-of-date, according to the financial data provider.
According to Brad Lamensdorf, who co-manages the AdvisorShares Ranger Equity Bear ETF HDGE, -2.65%,
the cost of borrowing shares of GameStop on Jan. 23 was an annualized 15.5%. That cost increases a short seller’s risk.
What if you wanted to short a stock that had even heavier short interest than GameStop? Lamensdorf said on Jan. 23 that there were no shares available to borrow for Carvana Co. CVNA, +10.63%,
Bed Bath & Beyond Inc. BBBY, -12.24%,
Beyond Meat Inc. BYND, +11.31%
or Coinbase Global Inc. COIN, +1.45%.
If you wanted to short AMC shares, you would pay an annual fee of 85.17% to borrow the shares.
Starting last week, and flowing into this week, management teams at several companies with microcap stocks (with market capitalizations below $100 million) said they were investigating naked short selling — short selling without actually borrowing the shares.
This brings us to three more terms:
A short-locate is a service a short seller requests from a broker. The broker finds shares for the short seller to borrow.
A natural locate is needed to make a “proper” short-sale, according to Moshe Hurwitz, who recently launched Blue Zen Capital Management in Atlanta to specialize in short selling. The broker gives you a price to borrow shares and places the actual shares in your account. You can then short them if you want to.
A nonnatural locate is “when the broker gives you shares they do not have,” according to Hurwitz.
When asked if a nonnatural locate would constitute fraud, Hurwitz said “yes.”
How is naked short selling possible? According to Hurwitz, “it is incumbent on the brokers” to stop placing borrowed shares in customer accounts when supplies of shares are depleted. But he added that some brokers, even in the U.S., lend out the same shares multiple times, because it is lucrative.
“The reason they do it is when it comes time to settle, to deliver, they are banking on the fact that most of those people are day traders, so there would be enough shares to deliver.”
Hurwitz cautioned that the current round of complaints about naked short selling wasn’t unusual and even though short selling activity can push a stock’s price down momentarily, “short sellers are buyers in waiting.” They will eventually buy when they cover their short positions.
“But to really push a stock price down, you need long investors to sell,” he said.
Different action that can appear to be naked shorting
Lamensdorf said the illegal naked shorting that Verb Technology Co. VERB, +69.65%,
Genius Group Ltd. GNS, +45.37%
and other microcap companies have been recently complaining about might include activity that isn’t illegal.
An investor looking to short a stock for which shares weren’t available to borrow, or for which the cost to borrow shares was too high, might enter into “swap transactions or sophisticated over-the-counter derivative transactions,” to bet against the stock,” he said.
This type of trader would be “pretty sophisticated,” Lamensdorf said. He added that brokers typically have account minimums ranging from $25 million to $50 million for investors making this type of trade. This would mean the trader was likely to be “a decent-sized family office or a fund, with decent liquidity,” he said.
Financial crime’s rapidly rising scale and destructive impact amplify the need for a genuinely robust data-driven solution. With global estimates suggesting $2 trillion is laundered annually and fraud now at epidemic levels, illicit finance has become one of the world’s most prevalent businesses.
This is not a victimless, white-collar crime. It exposes the most vulnerable in society to exploitation by criminal groups through the most heinous crimes, including human trafficking, drug trafficking, modern slavery, illegal wildlife trade and terrorist financing. As such, illicit finance is damaging the security and prosperity of all nations by effectively depriving individuals, communities, taxpayers and governments of vast swathes of vital capital.
Legislators, public authorities, regulators and the financial-services industry globally are investing enormous sums to combat the threat, but outcomes remain poor, with less than 1 percent of illicit funds recovered. This means that current efforts across the global ecosystem are not a sufficient deterrent.
Breaking down siloes
A key deficiency in financial-crime-fighting efforts is the continued prevalence of siloed data, driven not only by technical issues but also by legislative and regulatory factors. Financial institutions, governments and regulators frequently tend to guard their data, even in relation to financial crime. Still, this approach is ineffective and illustrates the urgent need for both private and public stakeholders to act far more collaboratively.
Significant potential value rests on combining financial-crime data held in the component parts of the ecosystem, especially across the banking sector and in law enforcement. Unlocking that potential relies on building more complete and durable partnerships and resolving significant legislative and regulatory issues that are culturally ingrained.
Overcoming these hurdles will allow different parts of the system to unlock the value of readily available external data, while data integration and sharing can create complete pictures of criminal activity by helping to uncover patterns and new findings.
Even though roughly $214 billion1 is spent annually on anti-money laundering and sanctions compliance by financial institutions, the return on investment (ROI) is negligible. This is because the interpretations or effects of existing regulations and supervisory frameworks lock efforts into high-volume, low-value activities (such as SARs [Suspicious Activity Reports] reporting at low-suspicion thresholds and on an all-crimes basis), which are not garnering useful data or intelligence. And even when intelligence or insights are generated, they are not routinely shared or acted upon.
Persisting on such a strategy is ineffective and undesirable. Instead, both public and private institutions need to place greater emphasis on bolstering the efforts of law enforcement to create united intelligence efforts enriched by two-way exchanges of information so that public authorities and financial institutions can see fuller and truer pictures of serious criminal threats operating in the financial system.
Failing to do this will perpetuate the rule-following asymmetry that exists between criminals and their prospective captors: Those who commit financial crimes are not bound by any information-sharing rules and arguably exploit the fact that the people trying to uncover them are restrained by such restrictions.
This uneven playing field undermines law enforcement’s ability to build a picture quickly and comprehensively while simultaneously undermining financial institutions’ ability to fully understand their global financial-crime risk exposures. The irony is that it’s often the case that all the pieces of the intelligence jigsaw puzzle exist, and the “bad actors” and criminal organisations involved are already known and on watchlists. Still, the dots simply cannot be connected.
Improved information sharing between domestic and international partners would overcome this issue and provide financial institutions, law enforcement and intelligence agencies with invaluable insights that would significantly enhance efforts to stop the likes of private criminal enterprises and rogue states from inflicting further damage globally.
A more cohesive defence strategy may be able to more quickly and decisively identify where increased illicit activities are occurring or where new pockets are manifesting themselves, as is the case with the real-estate sector at present, and therefore proactively combat them.
Cross-ecosystem collaboration is key
Being reactive will leave the financial-services ecosystem exposed and vulnerable to significant criminal harm and adverse regulatory scrutiny. A sophisticated, joined-up framework between public and private organisations is, therefore, critical to tackling the constant threat of illicit finance and enabling an effective response when global events create the potential for spikes in illicit activity, as we have seen with fraud during the pandemic.
Public-private partnerships (PPPs) are actively encouraged by the Financial Action Task Force (FATF) and are increasingly accepted as high-value, voluntary activities that can drive engagement between policymakers, financial-services participants and other sectors.
Utility models are also widely recognised as beneficial to all stakeholders in the ecosystem, either to allow duplicative processes to be undertaken once on behalf of many—such as Know Your Client/Customer (KYC) protocols—or to bring together datasets for collective analysis to enhance risk-management functions. In addition, setting national risk priorities can support the public and private sectors in working collaboratively on agreed outcomes.
This is where technology, automation, artificial intelligence (AI) and machine learning (ML) can make a difference. Being intelligence-led helps drive efficiency and effectiveness across the financial-crime-detection framework by enhancing and enabling a truly risk-based approach. And by embracing data and analytics alongside innovative technologies such as digital ID (digital identity verification), stakeholders can germinate a crucial enabler of a more robust financial-crime framework that can drive transformation.
Some common examples of digital ID include electronic databases—such as distributed ledgers to obtain, confirm and store identity evidence—and digital credentials—that help authenticate identity for accessing mobile, online and offline applications. Beyond this, biometrics can identify or authenticate individuals2.
Nonetheless, despite the FATF’s estimate that 60 percent of global gross domestic product (GDP) will be digitised by the end of 2022, there remains no comprehensive, internationally agreed-upon set of standards for developing digital IDs3. This is inhibitive for tackling illicit finance, given that leveraging the power of data can provide numerous benefits, even beyond efficient and effective detection.
Data collection and analysis can help institutions manage the ever-increasing costs of compliance by allowing multiple versions of similar systems, such as case management and analytics tools, to be rationalised and specific repetitive, high-volume tasks to be automated. It can also allow a financial institution to build a more comprehensive understanding of risk so that exposures to regulatory sanctions can be reduced at both the corporate and senior-manager levels.
A holistic customer view is critical to enabling financial institutions to protect their own systems and their customers’ assets from criminal exploitation and ultimately deliver better societal outcomes.
While progress relies on all stakeholders, the financial-services industry can take vital steps to demonstrate its commitment to a new way of addressing illicit finance.
Financial institutions must ensure that they do not have any communication barriers internally between anti-money-laundering (AML), cybersecurity and fraud teams, and they must expedite efforts to share data with peers to ensure better levels of financial-crime prevention and detection.
The firms that will prosper are those that acknowledge that the responsibility for driving this forward cannot simply be left with the relevant teams but that success will require board-level sponsorship of such an agenda, with a nominated board member tasked with setting goals and targets for the organisation’s fight against financial crime.
Signs of progress
While significant progress remains to be made, there are some encouraging signs globally of improved detection and prevention frameworks.
In Australia, the AUSTRAC’s (Australian Transaction Reports and Analysis Centre’s) Fintel Alliance is bringing together an increasing number of banks, remittance-service providers and gambling operators, as well as law enforcement and security agencies, to share intelligence and develop solutions. Investments have been allocated to enhancing reporting systems for financial institutions to streamline compliance and drive more timely and effective financial intelligence. A parliamentary committee is examining the adequacy and efficacy of the national AML/CFT (anti-money laundering/combating the financing of terrorism) regime and is due to report on it in the coming months.
In Europe, through the Transaction Monitoring Netherlands (TMNL) initiative, five major banks are piloting collective transaction monitoring of combined pseudonymised transaction data to identify unusual patterns of cross-bank activity relating to money laundering. The immediate goal is to enhance the effectiveness of the participating banks’ efforts against financial crime, with a potential endpoint being the development of an industry-wide utility that will perform transaction-monitoring activities on behalf of the financial institutions involved.
While the TMNL is a private-sector-led initiative, the banks have sought active cooperation with stakeholders in the public sector to build the TMNL platform, such as securing detailed typological input from the Dutch Financial Intelligence Unit (FIU).
These approaches provide substantive blueprints for the wider global financial ecosystem to follow, and mimicking them simply requires the will of all stakeholders to pull together for the common good.
Moving forward
Research and experience show the benefits of connecting data from multiple sources. Not only does such an approach broaden the amount of data available, but it provides an opportunity for greater and more diverse scrutiny of the data, potentially leading to discoveries that may have been almost impossible to identify otherwise.
But for a truly effective and efficient detection-and-prevention system, stakeholders must embed technology, such as AI and ML, into their financial-crime-fighting frameworks to ensure robust data scrutiny and pattern recognition. For such a system to emerge, financial institutions, regulators, governments and law-enforcement agencies must improve the levels of collaboration internally and between each other.
There is growing acknowledgment of this in key financial centres. For example, significant steps have been taken in the United Kingdom, most recently through the new Economic Crime and Corporate Transparency Bill, to implement reforms aimed at preventing the abuse of limited partnerships, providing additional powers to seize and recover suspected criminal crypto-assets, and enabling new intelligence-gathering powers for law enforcement and greater confidence for businesses around information sharing.
Similarly, in the United States, through the Anti-Money Laundering Act of 2020 (US AMLA), the FinCEN (Financial Crimes Enforcement Network) has established national AML/CFT priorities for financial institutions to incorporate into their AML/CFT programmes and for regulators and examiners to include in their rules, guidance and examinations. This establishment of national priorities represents a significant step forward in shifting the primary focus of US regulators and financial institutions from maintaining technical compliance through their AML/CFT programmes to a more risk-based, innovative and outcomes-oriented approach and has the potential to provide a “blueprint” for other jurisdictions to follow once fully implemented.
These changes demonstrate the building momentum for change, growing understanding of the need to embrace cross-ecosystem collaboration and strengthening combined power of data and intelligence underpinned by innovative technology. But for a watertight global defence, this approach needs to be ubiquitous.
Success here will improve global financial well-being, elevate financial institutions’ reputations and support environmental, social and governance (ESG) goals by ensuring that the world’s capital is used for positive and inclusive innovations rather than crime and exploitation.
Anna Celner, Global Banking & Capital Markets Practice Leader
Anna is the Global Banking & Capital Markets Practice Leader for Deloitte, with the responsibility for setting and executing the global banking strategy. In this role, she leads strategic client portfolio, go-to-market strategy, and the coordination of Deloitte’s global network to help banking clients address their strategic priorities and respond to regulatory, technology, and growth challenges.
Sir Rob Wainwright, Partner and Senior Banking Advisor
Sir Rob Wainwright is a Partner and Senior Banking Advisor at Deloitte. He previously served as the Executive Director of Europol for almost a decade. Sir Rob has had a 28-year career in intelligence and international affairs at the Serious Organised Crime Agency, the National Criminal Intelligence Service and the British Security Service. In June 2018, he was awarded a Knighthood by HM Queen Elizabeth II for his services to security and policing.
On the same day that that the Bahamas extradited FTX co-founder and former CEO Sam Bankman-Fried to the U.S. to face criminal charges, two former executives at FTX and Alameda Research pleaded guilty Wednesday to federal fraud charges.
Caroline Ellison, 28, the former chief executive of Alameda Research — the crypto trading company founded by Bankman-Fried — and Zixiao (Gary) Wang, 29, co-founder of crypto platform FTX and its former chief technology officer, were charged for their roles in contributing to the crypto platform’s collapse.
The pair each faced decades-long prison sentences if convicted, and pleaded guilty to charges that included wire fraud, securities fraud and commodities fraud in exchange for leniency. In a video Wednesday night, U.S. Attorney Damian Williams of the Southern District of New York said both were cooperating in the continuing investigation into FTX and Bankman-Fried.
Williams added that Bankman-Fried, 30, was in FBI custody and will appear in court in “as soon as possible,” and suggested more charges in the FTX case could be forthcoming.
“If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it,” Williams said. “We are moving quickly and our patience is not eternal. … and we are far from done.”
According to the SEC complaint, Ellison helped manipulate the price of FTX-issued crypto token FTT, which served as collateral for undisclosed loans from FTX customers’ assets to Alameda. In addition, the SEC alleges Bankman-Fried misled customers by falsely claiming FTX was a safe trading platform with strict risk-mitigation measures.
The SEC claims Wang created software code to allow Alameda to divert FTX customers’ funds, and that Ellison used those funds for Alameda’s trading activity.
“As part of their deception, we allege that Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards,” SEC Chair Gary Gensler said in a statement. “We further allege that Ms. Ellison and Mr. Wang played an active role in a scheme to misuse FTX customer assets to prop up Alameda and to post collateral for margin trading. When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag. Until crypto platforms comply with time-tested securities laws, risks to investors will persist. It remains a priority of the SEC to use all of our available tools to bring the industry into compliance.”
Bankman-Fried was arrested in the Bahamas last week after he was indicted by U.S. federal prosecutors, who allege he played a key role in the collapse of FTX, diverting billions of dollars of customer assets and defrauding investors, customers and lenders.
The announcement has led some to speculate that Trump may be hoping that becoming a presidential candidate will in some way shield him from prosecution.
Donald Trump has announced his bid to run in the 2024 presidential race. WSJ’s Alex Leary breaks down the challenges the former president will face on the campaign trail, including new political rivals and a waning influence among voters. Photo Composite: Adele Morgan
So, does an indictment—or even a felony conviction—prevent a presidential candidate from running or serving in office?
The short answer is no. Here’s why:
The U.S. Constitution specifies in clear language the qualifications required to hold the office of the presidency. In Section 1, Clause 5 of Article II, it states: “No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been fourteen Years a Resident within the United States.”
These three requirements—natural-born citizenship, age, and residency—are the only specifications set forth in the United States’ founding document.
Congress has ‘no power to alter’
Furthermore, the Supreme Court has made clear that constitutionally prescribed qualifications to hold federal office may not be altered or supplemented by either the U.S. Congress or any of the states.
Justices clarified the court’s position in their 1969 Powell v. McCormack ruling. The case followed the adoption of a resolution by the House of Representatives barring pastor and New York politician Adam Clayton Powell Jr. from taking his seat in the 90th Congress.
The resolution was not based on Powell’s failure to meet the age, citizenship and residency requirements for House members set forth in the Constitution. Rather, the House found that Powell had diverted Congressional funds and made false reports about certain currency transactions.
When Powell sued to take his seat, the Supreme Court invalidated the House’s resolution on grounds that it added to the constitutionally specified qualifications for Powell to hold office. In the majority opinion, the court held that: “Congress has no power to alter the qualifications in the text of the Constitution.”
For the same reason, no limitation could now be placed on Trump’s candidacy. Nor could he be barred from taking office if he were to be indicted or even convicted.
But in case of insurrection…
The Constitution includes no qualification regarding those conditions—with one significant exception. Section 3 of the 14th Amendment disqualifies any person from holding federal office “who, having previously taken an oath…to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof.”
Under the provisions of the 14th Amendment, Congress is authorized to pass laws to enforce its provisions. And in February 2021, one Democratic congressman proposed House Bill 1405, providing for a “cause of action to remove and bar from holding office certain individuals who engage in insurrection or rebellion against the United States.”
Even in the event of Trump being found to have participated “in insurrection or rebellion,” he might conceivably argue that he is exempt from Section 3 for a number of reasons. The 14th Amendment does not specifically refer to the presidency and it is not “self-executing”—that is, it needs subsequent legislation to enforce it. Trump could also point to the fact that Congress enacted an Amnesty Act in 1872 that lifted the ban on office holding for officials from many former Confederate states.
He might also argue that his activities on and before Jan. 6 did not constitute an “insurrection” as it is understood by the wording of the amendment. There are few judicial precedents that interpret Section 3, and as such its application in modern times remains unclear. So even if House Bill 1405 were adopted, it is not clear whether it would be enough to disqualify Trump from serving as president again.
Running from behind bars
Even in the case of conviction and incarceration, a presidential candidate would not be prevented from continuing their campaign—even if, as a felon, they might not be able to vote for themselves.
History is dotted with instances of candidates for federal office running—and even being elected—while in prison. As early as 1798—some 79 years before the 14th Amendment — House member Matthew Lyon was elected to Congress from a prison cell, where he was serving a sentence for sedition for speaking out against the Federalist Adams administration.
Eugene Debs, founder of the Socialist Party of America, ran for president in 1920 while serving a prison sentence for sedition. Although he lost the election, he nevertheless won 913,693 votes. Debs promised to pardon himself if he were elected.
Several provisions within the Constitution offer alternatives that could be used to disqualify a president under indictment or in prison.
The 25th Amendment allows the vice president and a majority of the Cabinet to suspend the president from office if they conclude that the president is incapable of fulfilling his duties.
The amendment states that the removal process may be invoked “if the President is unable to discharge the powers and duties of his office.”
It was proposed and ratified to address what would happen should a president be incapacitated due to health issues. But the language is broad and some legal scholars believe it could be invoked if someone is deemed incapacitated or incapable for other reasons, such as incarceration.
To be sure, a president behind bars could challenge the conclusion that he or she was incapable from discharging the duties simply because they were in prison. But ultimately the amendment leaves any such dispute to Congress to decide, and it may suspend the president from office by a two-thirds vote.
Indeed, it is not clear that a president could not effectively execute the duties of office from prison, since the Constitution imposes no requirements that the executive appear in any specific location. The jail cell could, theoretically, serve as the new Oval Office.
Finally, if Trump were convicted and yet prevail in his quest for the presidency in 2024, Congress might choose to impeach him and remove him from office. Article II, Section 4 of the Constitution allows impeachment for “treason, bribery, and high crimes and misdemeanors.”
Whether that language would apply to Trump for indictments or convictions arising from his previous term or business dealings outside of office would be a question for Congress to decide. The precise meaning of “high crimes and misdemeanors” is unclear, and the courts are unlikely to second-guess the House in bringing an impeachment proceeding.
For sure, impeachment would remain an option—but it might be an unlikely one if Republicans maintained their majority in the House in 2024 and 2026.
Stefanie Lindquist is Foundation Professor of Law and Political Science at Arizona State University. She previously taught at Vanderbilt University, the University of Georgia and the University of Texas.
SAO PAULO — Luiz Inácio Lula da Silva has done it again: Twenty years after first winning the Brazilian presidency, the leftist defeated incumbent Jair Bolsonaro Sunday in an extremely tight election that marks an about-face for the country after four years of far-right politics.
With 99.9% of the votes tallied in the runoff vote, da Silva had 50.9% and Bolsonaro 49.1%, and the election authority said da Silva’s victory was a mathematical certainty. At about 10 p.m. local time, three hours after the results were in, the lights went out in the presidential palace and Bolsonaro had not conceded nor reacted in any way.
Before the vote, Bolsonaro’s campaign had made repeated — unproven — claims of possible electoral manipulation, raising fears that he would not accept defeat and would challenge the results if he lost.
The high-stakes election was a stunning reversal for da Silva, 77, whose imprisonment for corruption sidelined him from the 2018 election that brought Bolsonaro, a defender of conservative social values, to power.
“Today the only winner is the Brazilian people,” da Silva said in a speech at a hotel in downtown Sao Paulo. “This isn’t a victory of mine or the Workers’ Party, nor the parties that supported me in campaign. It’s the victory of a democratic movement that formed above political parties, personal interests and ideologies so that democracy came out victorious.”
Da Silva is promising to govern beyond his party. He wants to bring in centrists and even some leaning to the right who voted for him for the first time, and to restore the country’s more prosperous past. Yet he faces headwinds in a politically polarized society where economic growth is slowing and inflation is soaring.
This was the country’s tightest election since its return to democracy in 1985, and the first time since then that the sitting president failed to win reelection. Just over 2 million votes separated the two candidates; the previous closest race, in 2014, was decided by a margin of roughly 3.5 million votes.
The highly polarized election in Latin America’s biggest economy extended a wave of recent leftist victories in the region, including Chile, Colombia and Argentina.
As Lula spoke to his supporters — promising to “govern a country in a very difficult situation” — Bolsonaro had yet to concede.
Da Silva’s inauguration is scheduled to take place on Jan. 1. He last served as president from 2003-2010.
Thomas Traumann, an independent political analyst, compared the results to Biden’s 2020 victory, saying da Silva is inheriting an extremely divided nation.
“The huge challenge that Lula has will be to pacify the country,” he said. “People are not only polarized on political matters, but also have different values, identity and opinions. What’s more, they don’t care what the other side’s values, identities and opinions are.”
Congratulations for da Silva — and Brazil — began to pour in from around Latin America and across the world Sunday evening, including from U.S. President Joe Biden, who highlighted the country’s “free, fair, and credible elections.” The European Union also congratulated da Silva in a statement, commending the electoral authority for its effectiveness and transparency throughout the campaign.
Bolsonaro had been leading throughout the first half of the count and, as soon as da Silva overtook him, cars in the streets of downtown Sao Paulo began honking their horns. People in the streets of Rio de Janeiro’s Ipanema neighborhood could be heard shouting, “It turned!”
Da Silva’s headquarters in downtown Sao Paulo hotel only erupted once the final result was announced, underscoring the tension that was a hallmark of this race.
“Four years waiting for this,” said Gabriela Souto, one of the few supporters allowed in due to heavy security.
Outside Bolsonaro’s home in Rio, ground-zero for his support base, a woman atop a truck delivered a prayer over a speaker, then sang excitedly, trying to generate some energy as the tally grew for da Silva. But supporters decked out in the green and yellow of the flag barely responded. Many perked up when the national anthem played, singing along loudly with hands over their hearts.
For months, it appeared that da Silva was headed for easy victory as he kindled nostalgia for his presidency, when Brazil’s economy was booming and welfare helped tens of millions join the middle class.
But while da Silva topped the Oct. 2 first-round elections with 48% of the vote, Bolsonaro was a strong second at 43%, showing opinion polls significantly had underestimated his popularity.
Bolsonaro’s administration has been marked by incendiary speech, his testing of democratic institutions, his widely criticized handling of the COVID-19 pandemic and the worst deforestation in the Amazon rainforest in 15 years. But he has built a devoted base by defending conservative values and presenting himself as protection from leftist policies that he says infringe on personal liberties and produce economic turmoil. And he shored up support in an election year with vast government spending.
“We did not face an opponent, a candidate. We faced the machine of the Brazilian state put at his service so we could not win the election,” da Silva told the crowd in Sao Paulo.
Da Silva built an extensive social welfare program during his tenure that helped lift tens of millions into the middle class. The man universally known as Lula also presided over an economic boom, leaving office with an approval rating above 80%, prompting then U.S. President Barack Obama to call him “the most popular politician on Earth.”
But he is also remembered for his administration’s involvement in vast corruption revealed by sprawling investigations. Da Silva’s arrest in 2018 kept him out of that year’s race against Bolsonaro, a fringe lawmaker at the time who was an outspoken fan of former U.S. President Donald Trump.
Da Silva was jailed for for 580 days for corruption and money laundering. His convictions were later annulled by Brazil’s top court, which ruled the presiding judge had been biased and colluded with prosecutors. That enabled da Silva to run for the nation’s highest office for the sixth time.
Da Silva has pledged to boost spending on the poor, reestablish relationships with foreign governments and take bold action to eliminate illegal clear-cutting in the Amazon rainforest.
“We will once again monitor and do surveillance in the Amazon. We will fight every illegal activity,” da Silva said in his acceptance speech. “At the same time we will promote sustainable development of the communities of the Amazon.”
The president-elect has pledged to install a ministry for Brazil’s original peoples, which will be run by an Indigenous person.
But as da Silva tries to achieve these and other goals, he will be confronted by strong opposition from conservative lawmakers likely to take their cues from Bolsonaro.
Carlos Melo, a political science professor at Insper University in Sao Paulo, compared the likely political climate to that experienced by former President Dilma Rousseff, da Silva’s hand-picked successor after his second term.
“Lula’s victory means Brazil is trying to overcome years of turbulence since the reelection of President Dilma Rousseff in 2014. That election never ended; the opposition asked for a recount, she governed under pressure and was impeached two years later,” said Melo. “The divide became huge and then made Bolsonaro.”
Unemployment this year has fallen to its lowest level since 2015 and, although overall inflation has slowed during the campaign, food prices are increasing at a double-digit rate. Bolsonaro’s welfare payments helped many Brazilians get by, but da Silva has been presenting himself as the candidate more willing to sustain aid going forward and raise the minimum wage.
In April, he tapped center-right Geraldo Alckmin, a former rival, to be his running mate. It was another key part of an effort to create a broad, pro-democracy front to not just unseat Bolsonaro, but to make it easier to govern.
“If Lula manages to talk to voters who didn’t vote for him, which Bolsonaro never tried, and seeks negotiated solutions to the economic, social and political crisis we have, and links with other nations that were lost, then he could reconnect Brazil to a time in which people could disagree and still get some things done,” Melo said.
A federal jury in New York convicted Nikola Corp. founder Trevor Milton of securities fraud for what prosecutors said were his repeated lies about the development of the company’s zero-emissions trucks and technology.
The guilty verdict caps the downfall of Milton, who founded Nikola NKLA, -1.29%
in his basement in 2015 and took it public in 2020 at a valuation of $3.3 billion, when the company hadn’t sold a single truck. The company’s market valuation briefly exceeded that of industry giants such as Ford Motor Co. F, -0.85%
The whipsaw action wasn’t limited to stocks, and was described by Rick Rieder, the chief investment officer for global fixed income at BlackRock, as “one of the craziest days” of his career.
The bond market’s warning
Some investors who focus on stocks might not realize that the bond market is much larger, and that its movements can cause government and central-bank policies to shift. Larry McDonald, founder of The Bear Traps Report and author of “A Colossal Failure of Common Sense,” which described the 2008 failure of Lehman Brothers, explained just how bad the action was in the U.K. bond market over the past few weeks, when 30-year government bonds issued in December traded as low as 24 cents on the dollar. He also predicted what will happen if the Federal Reserve continues on its current course of interest-rate increases.
Michael Brush argues the Federal Reserve is moving too quickly to raise interest rates and cool the U.S. economy. He expects a rapid decline in inflation and a new bull market for stocks. In a column, he shares five sentiment indicators that suggest it is time to buy stocks — especially this group of companies.
Time for a refreshing COLA if you are on Social Security
Getty Images
The Social Security Administration has announced that its cost-of-living adjustment (COLA) for 2023 will be 8.7%, the largest increase in four decades. There is more to the story, including tax implications and changes to Medicare, as Jessica Hall and Alessandra Malito explain.
Freddie Mac said interest rates on 30-year mortgage loans averaged 6.92% on Oct. 13, up from 3.05% a year earlier. Mortgage Daily said rates had hit 7.10% — the highest in 20 years — and economists are warning these levels could be a “new normal.”
A homeowner locked-in with a low interest rate on their mortgage loan will be reluctant to sell. And some would-be buyers may now be priced out of the market because of much higher loan payments. Here’s what economists expect for home prices in 2023.
This is why Florida’s insurance market is such a mess
Florida insurers are not only suffering from storm-damage payouts.
Joe Raedle/Getty Images
Hurricanes are nothing new to Floridians, but insurers in the state are losing money even though premiums have doubled over the past five years. Shahid S. Hamid, the director of the Laboratory for Insurance at Florida International University, explains why the Florida insurance market is so distorted.
Here’s a travel option you may never have heard of — home swapping
Villefranche-sur-mer on the French Riviera.
istock
Home swapping can give you an opportunity to live as a local in a faraway place while spending much less than you would as a tourist. Here’s how it works.
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