WASHINGTON — A federal prosecutor admitted during a closed-door court session that the Justice Department’s probe into a $2.5 billion Federal Reserve renovation project has uncovered no criminal wrongdoing, newly released hearing transcripts reveal.
Assistant U.S. Attorney Andrew Massucco made this acknowledgment during a March 3 hearing that was sealed from public view, court documents show. Just over a week later, Chief Judge James Boasberg struck down government subpoenas targeting the Federal Reserve, delivering a major setback to the ongoing investigation.
In his March 11 decision, Boasberg stated that prosecutors had presented “essentially zero evidence” suggesting Fed Chair Jerome Powell committed any crimes. The Obama-appointed judge also criticized the government’s reasoning for the subpoenas as “thin and unsubstantiated.”
During the sealed proceeding, Judge Boasberg pressed the prosecutor from U.S. Attorney Jeanine Pirro’s office to identify specific evidence of fraudulent activity or criminal behavior connected to Powell’s congressional testimony about the renovation or the construction project itself.
“So what false statements did (Powell) make before Congress?” Boasberg questioned Massucco, the transcript indicates.
“Well, we don’t know is my first answer,” Massucco, who heads the criminal division in Pirro’s Washington office, responded. “However, there are certain areas that he addressed that caused concern.”
“Okay,” the judge pressed further. “And then what evidence is there of fraud or criminal misconduct in relation to the renovations?”
“Again, we do not know at this time. However, there are 1.2 billion reasons for us to look into it,” Massucco answered, alluding to the project’s budget overruns.
The ongoing investigation has stalled Senate confirmation proceedings for Kevin Warsh, President Donald Trump’s nominee to succeed Powell when his chairmanship expires May 15. Powell may continue serving beyond that deadline if no replacement receives approval.
“A mountain of evidence suggests that the Government served these subpoenas on the Board to pressure its Chair into voting for lower interest rates or resigning,” the judge stated in his ruling.
During the closed hearing, Massucco maintained that no evidence exists showing prosecutors’ motivation for the grand jury subpoenas “is anything other than trying to find the truth of the matter.”
“And we have a right to do that,” he stated.
Robert Hur, legal counsel representing the Federal Reserve’s board of governors during the March 3 session, argued the subpoenas constitute a pressure tactic supporting Trump’s campaign for reduced interest rates.
“He clearly has very strong political motives to try to get lower interest rates, but because of the safeguards that have been erected by Congress around the Federal Reserve’s independence when it comes to setting monetary policy, he can’t get it,” Hur explained to the court.
Pirro, the former Fox News personality chosen by Trump to head the country’s largest U.S. Attorney’s office, criticized Boasberg as an “activist judge” and accused him of having “neutered the grand jury’s ability to investigate crime.” She announced plans to challenge his ruling.
“This is wrong and it is without legal authority,” she declared during a press briefing earlier this month.
A Federal Reserve representative declined to provide comment Tuesday.
Pirro’s office focused their investigation on Powell’s brief remarks last June before the Senate Banking Committee, where lawmakers questioned him about budget overruns in the Fed’s comprehensive building renovations. Recent Fed estimates indicate the current projected cost of $2.5 billion exceeds a 2022 projection of $1.9 billion by approximately $600 million.
In his decision, Boasberg noted that the Justice Department declined his proposal allowing the government to present additional evidence against Powell privately to him, avoiding disclosure to the Fed or Powell.
“The Court is thus left with no credible reason to think that the Government is investigating suspicious facts as opposed to targeting a disfavored official,” the judge concluded.
