The Justice Department no longer plans to appeal a court ruling that quashed two subpoenas directed at the Federal Reserve and its chairman, the latest sign of surrender from U.S. Attorney Jeanine Pirro in the politically thorny probe of the independent central bank, according to a legal filing Monday.
Pirro, the top federal prosecutor in D.C. and an ally of President Donald Trump, announced last month that she was closing the criminal investigation into cost overruns in the Fed’s $2.5 billion building renovation. Prosecutors spent months looking for evidence of fraud, or false statements to Congress, by Fed Chair Jerome H. Powell, who testified briefly about the construction project last year.
When Pirro closed the probe on April 24, she said her office still intended to appeal a ruling by Chief U.S. District Judge James E. Boasberg of D.C., who had effectively halted the investigation by quashing two grand-jury subpoenas that had been issued to the Fed and Powell.
Even with the probe over, Pirro signaled she wanted to preserve the principle that the subpoenas were a valid exercise of prosecutorial authority. But her insistence on fighting for them prompted concern at the Fed that her dropping of the investigation could prove temporary.
In his March ruling on the subpoenas, Boasberg said prosecutors had provided “essentially zero evidence” of a crime. The judge said the subpoenas were an illegal effort by the Trump administration to get Powell to lower interest rates or resign.
Pirro faced a Sunday deadline to file a notice of appeal. The U.S. attorney’s office said Monday it would not pursue an appeal after all, because any appeal was likely to be dismissed as moot since Pirro had closed the criminal investigation.
Instead, prosecutors in the U.S. attorney’s office filed court papers asking Boasberg to throw out his prior rulings in the case.
The prosecutors, G.A. Massucco-LaTaif and Steven Vandervelden, argued that Boasberg’s rulings had placed troublesome limits on the executive branch’s ability to prosecute crimes and raised First Amendment concerns. Boasberg based his ruling on more than 100 statements from Trump and his aides criticizing Powell, finding that they showed impermissible bias against the Fed chair.
“Some presidents have a more acidic pen and pugnacious style than others,” Massucco-LaTaif and Vandervelden wrote in Monday’s filing. “But it cannot be that the President effectively forfeits his constitutional authority to faithfully execute the criminal laws through grand-jury investigations if he has been especially critical of targets or witnesses, any more than a person can somehow protect himself against federal grand-jury investigations by ramping up criticism of the President or other Executive Branch officials.”
Even as she retreated from the appeal, Pirro had said she was continuing the legal fight. The Supreme Court has said grand juries have broad investigative powers and may issue subpoenas based on leads as thin as tips and rumors.
Attorneys for the Fed noted in response to that argument that 10 federal appellate courts across the country have ruled that subpoenas nonetheless can be quashed if a judge finds that their sole or dominant purpose is to harass a target.
“We continue to litigate Judge Boasberg’s illegal quashing of our subpoenas in order that it no longer stand and to prevent it from spawning any legal consequences,” Pirro said in a statement Monday, referring to her new motion asking Boasberg to vacate his prior rulings.
The Fed did not immediately respond to a request for comment.
Pirro’s move to drop the investigation last month cleared the way for Kevin Warsh, Trump’s nominee to become the next Fed chair, to be confirmed by the Senate and take the helm once Powell’s term expires on May 15. A key Republican senator on the banking committee, Thom Tillis of North Carolina, had been blocking Warsh’s nomination until Pirro closed the Fed probe.
Powell last week told reporters that the Justice Department investigation was a big part of his decision to remain on the Fed board after he is no longer chairman. His term as one of the Fed’s seven governors runs until 2028.
Powell has vowed to remain at the Fed until the criminal investigation ends “with transparency and finality,” and he has described the criminal investigation as a baseless and extraordinary incursion by the president into the central bank’s independence.
“The things that have happened really in the last three months have, I think, left me no choice but to stay until I see them through,” Powell said.
As she closed the probe last month, Pirro said she would not hesitate to restart it if the Fed’s inspector general found evidence of wrongdoing in its own review of the cost overruns in the Fed’s first large-scale overhaul of its historic headquarters overlooking the National Mall. A previous probe of the same construction project conducted five years ago by the inspector general did not find evidence of criminality.
The Fed has said the project’s overruns of more than $1 billion were driven by increased labor costs, asbestos remediation needs and other issues that are not unusual for large renovations of historic buildings.
After Boasberg issued his ruling in March, prosecutors filed a motion for reconsideration, arguing he had applied the wrong legal standard to the dispute. The judge denied that request.
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