WASHINGTON — A sealed transcript shows a federal prosecutor conceded prosecutors had no evidence of a crime tied to Federal Reserve Chair Jerome Powell, and a judge later quashed subpoenas the Justice Department had sought from the Federal Reserve in a criminal investigation involving a large renovation project.
The dispute centered on a March 3 hearing that Chief Judge James Boasberg held behind closed doors and later referenced in his March 11 ruling. Boasberg described the government’s evidence as “essentially zero evidence” to suspect Powell of criminal wrongdoing and said prosecutors’ justification for the subpoenas was “thin and unsubstantiated,” according to the reporting of the sealed-hearing transcript.
In the sealed hearing, Boasberg pressed Assistant U.S. Attorney Andrew Massucco, who works in the criminal division for U.S. Attorney Jeanine Pirro’s Washington office, to identify the evidence. “So what false statements did (Powell) make before Congress?” the judge asked, according to the transcript. Massucco replied, “Well, we don’t know is my first answer,” adding that “there are certain areas that he addressed that caused concern.”
The judge then asked what evidence prosecutors had of fraud or criminal misconduct tied to the renovations. “Again, we do not know at this time,” Massucco said, according to the transcript. He added: “However, there are 1.2 billion reasons for us to look into it,” referring to the amount of the project’s cost overruns.
Boasberg quashed the subpoenas eight days after the sealed hearing. In his ruling, the judge said the Justice Department rejected his offer to let prosecutors submit additional evidence directly to him, so the government would not have to disclose its theory to the Federal Reserve or Powell.
The judge wrote that the court was “thus left with no credible reason to think that the Government is investigating suspicious facts as opposed to targeting a disfavored official,” according to the transcript reporting. He also said the government’s presentation did not establish a credible basis for the subpoenaed investigation into Powell’s conduct related to the renovations.
During the March 3 proceeding, Robert Hur, who represented the Federal Reserve board of governors, told the judge that the subpoenas were part of a pressure effort tied to Trump’s interest-rate goals. Hur said the prosecutor had “very strong political motives to try to get lower interest rates,” and that because safeguards Congress built into the Fed’s independence apply to setting monetary policy, “he can’t get it.”
Massucco, for his part, told the judge during the sealed hearing that prosecutors’ motive for seeking grand jury subpoenas was “nothing other than trying to find the truth of the matter,” according to the transcript reporting. He added, “And we have a right to do that.”
Pirro, a former Fox News host who was President Donald Trump’s choice to lead the U.S. Attorney’s office overseeing the investigation, publicly criticized Boasberg’s decision. In earlier remarks, Pirro derided the judge as an “activist judge” and said he had “neutered the grand jury’s ability to investigate crime.” She vowed to appeal, calling the decision “wrong and it is without legal authority.”
A Fed spokesperson did not comment, according to the report.
The investigation arose from Powell’s brief testimony last June before the Senate Banking Committee, where he was asked about cost overruns related to the Federal Reserve’s renovation project. The report said the most recent estimates put the project’s cost at $2.5 billion, about $600 million higher than a 2022 estimate of $1.9 billion.
The dispute also has had consequences beyond the courtroom. The report said the investigation has delayed Senate consideration of Kevin Warsh, Trump’s pick to replace Powell when his term ends May 15, though Powell can remain chair past that date if the replacement is not approved.
As this case moves forward, the transcript’s account of what prosecutors said they did not know—coupled with Boasberg’s findings about the government’s lack of evidence—has sharpened the question of what basis the Justice Department had for subpoenaing the Federal Reserve in a probe tied to Powell’s congressional testimony.