COMMENTARY: Illegal FBI leaks a big problem


President Trump has been tweeting about “illegal leaks” by the FBI to the press.

He focused on the issue after such leaks forced the ouster of the national security adviser, Gen. Michael Flynn.

Good for Trump for pushing back against the FBI.

The leaks are a real problem. Flynn lost his job and suffered some reputational damage. In a series of other cases, businesses have been destroyed and lives have been ruined — one person even committed suicide — after leaks by either the FBI or federal prosecutors.

The leaks are central to a drama in a New York City federal criminal case about stock trades by Las Vegas sports bettor Billy Walters. Prosecutors in that case conceded in a court filing last month what they called “unquestionable misconduct by an agent of the Government … improper and inexcusable.”

A federal judge in New York City, P. Kevin Castel, has the opportunity either to order an evidentiary hearing into the leaks or to dismiss the case against Walters.

Either step would make the government pay a price for the misconduct.

A lawyer for Walters, Barry Berke of the firm Kramer Levin Naftalis and Frankel LLP, filed a legal memo earlier this month highlighting what he called “systematic and pervasive government misconduct spanning several cases.”

Berke writes that even though the government knew of the leaks in 2014, both the U.S. attorney’s office and FBI “made a decision not to stop the leaks or investigate (even after receiving confirmation from a reporter that an FBI agent was leaking), and the USAO subsequently made false and misleading statements to the Court as part of an effort to prevent the government’s misconduct from coming to light.”

The legal memo says that the combination of all this, considered as a whole, most certainly rises “to the level of government misconduct that is ‘so offensive that it shocks the conscience.’ ”

The memo says the leaks were a problem “not just in this case but in multiple other insider trading investigations,” including “investigations of Raj Rajaratnam (2009), David Ganek (2010), Michael Steinberg (2013) and Sanjay Valvani (2016), among others.”

Valvani, a father of two, was found dead by his wife in their Brooklyn Heights townhouse days after entering a non-guilty plea. News that he was a target of prosecutors leaked to the Wall Street Journal in April 2016, months before charges were brought.

Ganek was never charged and is suing the government over the publicized raid that forced the closure of his business. Steinberg’s conviction was dismissed after an appellate court overturned the government’s novel legal theory.

One of Trump’s early moves as president-elect was to announce his intention to reappoint the U.S. attorney in the Southern District of New York who oversaw these investigations, Preet Bharara. Bharara is a former aide to Sen. Charles Schumer, the Senate Democratic leader.

It was Schumer who reportedly provided Trump with Bharara’s cellphone number to facilitate the reappointment.

Schumer’s relations with Trump, once businesslike, have deteriorated over the past few months. Trump recently described Schumer as a “clown” and a “lightweight.”

If Trump tries to repair these matters himself, he’ll be assailed for politicizing the Justice Department or defending “insider traders.” So a lot is riding on Judge Castel’s decision. A dismissal would send a clear message that illegal leaks are unacceptable, whether the target is the president’s national security adviser, a Brooklyn money manager, or a Las Vegas bettor and businessman.

Ira Stoll is editor of FutureOfCapitalism.com and author of “JFK: Conservative.” His column appears Sunday.