Minimum Competence - Daily Legal News Podcast
Minimum Competence
Mon 10/16 - Bankruptcy Judge Resigns, CA Bill to Regulate Crypto, Menendez Indicted, More Shushing of Trump and Microsoft Acquires Activision

Mon 10/16 - Bankruptcy Judge Resigns, CA Bill to Regulate Crypto, Menendez Indicted, More Shushing of Trump and Microsoft Acquires Activision

We have a TX K judge resigning, CA passes a bill to regulate the crypto industry, Senator Menendez is indicted, more requests for Trump to pipe down and MS completes its acquisition of Activision.

Nuremberg trials, a pencil sketch

On this day in legal history in 1946 the Nuremberg executions were carried out, following the trials of ten high level officials of the Third Reich.

On October 16, 1946, a somber chapter in the aftermath of World War II closed with the Nuremberg executions. Ten prominent members of the Nazi regime were hanged, marking the end of the historic Nuremberg trials that sought justice for crimes against humanity, war crimes, and genocide. The executed men included Hans Frank, Wilhelm Frick, Alfred Jodl, Ernst Kaltenbrunner, Wilhelm Keitel, Joachim von Ribbentrop, Alfred Rosenberg, Fritz Sauckel, Arthur Seyss-Inquart, and Julius Streicher. Hermann Göring, another top Nazi official scheduled to be executed, evaded the noose by committing suicide the night before.

These executions took place in the gymnasium of Nuremberg Prison and were carried out by the United States Army. Master Sergeant John C. Woods and his assistant, military policeman Joseph Malta, were the executioners. They used the standard drop method instead of the long drop, which led to considerable controversy as some of the men did not die quickly from a broken neck, but slowly strangled to death. Reports indicated that some hangings took from 14 to 28 minutes, leading to claims of botched executions, which the Army later denied.

The order of the executions began at 1:11 a.m. with von Ribbentrop and spanned just about two hours. The condemned men were allowed final statements, many of which expressed a mix of nationalistic sentiments, pleas for peace, and even denial of guilt. For instance, Ribbentrop's final words were a wish for understanding between East and West, and for peace in the world. On the other hand, Fritz Sauckel claimed his innocence and asked God to make Germany great again.

Kingsbury Smith of the International News Service provided an eyewitness account, complete with photographs, that later appeared in newspapers. The initial belief was that the bodies were taken to Dachau for cremation. However, they were actually incinerated in a crematorium in Munich, and the ashes were scattered over the river Isar.

The Nuremberg executions and the trials that preceded them remain landmarks in the evolution of international law and human rights. While they meted out justice to some of the perpetrators of the Holocaust and other wartime atrocities, they also ignited debates on judicial ethics and the very nature of evil. Thus, October 16 serves not just as a grim remembrance of the punishment meted out to some of history’s worst criminals, but also as a milestone in the ongoing global dialogue about justice and accountability.

Judge David R. Jones, a top U.S. Bankruptcy Judge for the Southern District of Texas, has resigned amid an ethics investigation. The Fifth Circuit Court of Appeals issued a formal misconduct complaint against him for not disclosing his live-in relationship with Elizabeth Freeman, an attorney at Jackson Walker LLP, a prominent bankruptcy firm. In a statement, Jones said he had become a "distraction" to the court’s work and resigned to refocus attention on the court. His departure may trigger further scrutiny of the high-profile Chapter 11 cases he had overseen, including those involving Neiman Marcus, JCPenney, Seadrill Ltd., and Chesapeake Energy.

The misconduct complaint was lodged by Chief Judge Priscilla Richman of the U.S. Court of Appeals for the Fifth Circuit, which has jurisdiction over federal courts in Louisiana, Mississippi, and Texas. Freeman and Jones have lived together since 2017, and Jones approved attorney fees for Jackson Walker and even recommended Freeman for professional positions without disclosing their relationship. Richman stated there was "probable cause to believe that Judge Jones has engaged in misconduct."

Jackson Walker learned of the relationship allegation in March 2021 and instructed Freeman to stop working on cases overseen by Jones. The firm claims to have acted responsibly, including conducting a full inquiry and consulting external ethics counsel. Freeman left the firm in late 2022. Jones was sworn in as a bankruptcy judge in 2011 and was instrumental in making the Southern District of Texas a popular venue for large corporate Chapter 11 cases.

Jones defended his actions by stating he and Freeman were not married and that he had no economic interest in her cases. However, Richman cited instances where Jones violated the code of conduct for U.S. judges, including not recusing himself where impartiality could be questioned. The Department of Justice’s bankruptcy watchdog also questioned a bankruptcy plan mediated by Jones involving a party represented by Freeman.

As of now, it is unclear whether the federal appeals court investigation into Jones will continue post-resignation. Legal experts suggest the case could have long-term ripple effects, raising questions about what other judges or firms may have known about the relationship. Calls for larger reforms in bankruptcy practice have also been ignited, emphasizing the need for expanded disclosures and better regulation.

Texas Bankruptcy Judge Resigns After His Ethics Questioned (2)

Top US bankruptcy judge resigns amid ethics inquiry | Reuters

California Governor Gavin Newsom has signed into law a bill to regulate the state's cryptocurrency industry, which hosts nearly a quarter of all blockchain companies in North America. The legislation comes in the wake of issues like last year’s collapse of the FTX exchange and aims to establish a basic regulatory framework. Newsom, who is a proponent of blockchain innovation, had previously vetoed similar legislation but suggests that the current measure may still require further refinement for clarity.

The law, known as AB 39, is paired with another bill, SB 401, which targets cryptocurrency kiosks, ATM-like machines where cryptocurrencies can be bought or exchanged. Both bills were signed by the governor. AB 39 seeks to replicate New York's licensing system for cryptocurrency businesses, requiring various safety protocols, documentation, and fees. Businesses will also need to disclose if their services are insured and must maintain a customer phone line. Enforcement actions, including revoking licenses and imposing civil penalties of up to $20,000 per day, will be handled by the state Department of Financial Protection and Innovation.

SB 401 imposes restrictions on crypto kiosks, capping transactions at $1,000 per day and limiting charges to a maximum of $5 or 15% of the transaction value. Documentation requirements have also been stipulated for greater accountability. Consumer advocates believe that these laws are essential for curbing fraud in the cryptocurrency sector. However, industry groups like the Crypto Council for Innovation, representing companies such as Coinbase and Gemini, have opposed both bills. They argue that the laws need more exemptions for smaller companies and more clarity around the licensing process, while also claiming that the kiosk restrictions could effectively put such businesses out of operation.

Gov. Newsom Signs Crypto Licensing Bill in California

Sen. Robert Menendez of New Jersey has been indicted for allegedly acting as a foreign agent for Egypt, which has led to renewed scrutiny of his role in blocking reforms to the Foreign Agents Registration Act (FARA). Menendez, a Democrat, had substantial influence over FARA-related legislation in his capacity as chair of the Senate Foreign Relations Committee, a position he stepped down from following a previous corruption indictment. He has been identified as a significant obstacle to legislative efforts to modernize FARA, a law dating back to 1938 that requires disclosure for those acting on behalf of foreign interests.

Bipartisan calls for reforming FARA have been growing, especially as the Department of Justice has increased its investigations under the law since 2016. However, comprehensive updates have failed to gain traction. Menendez had publicly blocked an expedited vote on FARA reform in 2020 and also worked behind the scenes to thwart changes to the foreign lobbying disclosure law. His indictment has now raised questions about whether his actions were motivated by a desire to cover his own activities related to Egypt.

Menendez explained his 2020 decision to block a FARA package by urging a more comprehensive look at the proposed changes. A spokesperson for Sen. Charles Grassley, who backed the FARA reform, stated that Menendez has not been cooperative on FARA reform since the 2020 defeat of the proposal. Menendez, who is not charged under FARA but under a different statute pertaining to public officials, has denied any wrongdoing.

The indictment against Menendez has reinvigorated discussions about the need for FARA reform. Legal experts suggest that his case could be a catalyst for legislative action, much like past scandals have precipitated changes in lobbying laws. The removal of Menendez from his committee position could also remove a significant barrier to FARA reform.

The Justice Department alleges that Menendez conspired with officials who should have been registered under FARA, raising the stakes for reforms to the law, which has multiple ambiguities and outdated language. If Menendez is proven to have acted on Egypt’s behalf, it could make it difficult for Congress to ignore calls for reform, especially given that Menendez had been urging the DOJ to investigate a Republican politician under FARA.

Menendez Indicted as Foreign Agent After Thwarting Related Bill

U.S. prosecutors are expected to request a judge to restrict former President Donald Trump's public comments about a federal case that accuses him of attempting to overturn his loss in the 2020 election. The hearing is planned by U.S. District Judge Tanya Chutkan and aims to consider Special Counsel Jack Smith's bid to prevent Trump from discussing potential witnesses and making disparaging remarks about prosecutors, court staff, and potential jurors. Smith has pointed to Trump's "inflammatory public statements," including social media attacks, arguing that they could undermine public confidence in the legal process and possibly sway jurors.

Trump, who is not expected to attend the hearing, has strongly opposed this request, describing it as an attempt to limit his free speech while he is running for the Republican presidential nomination in 2024. The issue has become an early contentious point, approximately five months ahead of Trump's scheduled trial. The former president is charged with conspiracy to interfere in the vote counting and blocking the certification of the 2020 election, which he lost to Joe Biden.

Trump has pleaded not guilty and accuses the prosecutors of interfering with his campaign. This is one of four criminal cases brought against him by federal and state prosecutors this year. Earlier this month, a New York judge issued a gag order against Trump in a civil fraud trial, prohibiting him from speaking about court staff.

In a court filing, prosecutors cited comments Trump made on his Truth Social site about potential witnesses, including former Vice President Mike Pence and former top U.S. general Mark Milley. They argue that Trump's remarks are consistent with threatening behavior he exhibited after the 2020 election, which led to threats from his supporters against election officials.

Trump's legal team has responded by saying there is no evidence to suggest that his social media posts have adversely affected the case. They accuse prosecutors of trying to impose broad restrictions on Trump's ability to criticize the government. Trump's lawyers argue that the proposed gag order is an attempt by the Biden administration to unlawfully silence its major political opponent.

Special Counsel Jack Smith was appointed to provide the investigation a degree of independence from the political leadership of the U.S. Justice Department. Prosecutors have previously refuted allegations of political interference.

Prosecutors aim to persuade judge to rein in Trump comments on election case | Reuters

Microsoft has successfully completed its $69 billion acquisition of Activision Blizzard, making franchises like Call of Duty officially part of Xbox. The deal makes Microsoft the second-largest gaming company in the world, surpassing Sony. It also greatly expands the catalog for Microsoft's Xbox Game Pass subscription service, with Activision Blizzard titles like Overwatch 2, Diablo IV, and World of Warcraft, while boosting Microsoft's presence in mobile gaming through titles like Candy Crush and Call of Duty Mobile. Microsoft has signed a 10-year agreement to keep Call of Duty on PlayStation but may make other Activision Blizzard franchises exclusive to Xbox.

The acquisition expands Microsoft's gaming business by roughly 10,000 employees. Activision Blizzard CEO Bobby Kotick will remain with the company through the end of 2023, reporting to Microsoft Gaming CEO Phil Spencer. Microsoft has agreed to union neutrality, and Activision Blizzard employees will have the opportunity to recognize a union through a simple card check process starting 60 days from now.

The deal was initially announced in January 2022 after Activision Blizzard faced a drop in stock price due to major game delays and reports of sexual harassment within the company. Contrary to previous expectations that Kotick would resign after the deal, he is set to stay on and stands to make nearly $400 million from the sale via his stock holdings.

Legal battles almost derailed the merger, with the Federal Trade Commission attempting to block it, resulting in a week-long trial. However, Microsoft managed to clear the regulatory hurdles, including agreeing to sell cloud gaming rights for Activision Blizzard games in the UK to Ubisoft to satisfy the UK’s Competition and Markets Authority.

Going forward, Microsoft faces the challenge of integrating Activision Blizzard into its existing gaming operations, a process that is expected to take years. This acquisition significantly amplifies Microsoft's gaming business, coming after its 2020 purchase of Bethesda Softworks' parent company ZeniMax, and sets the stage for future industry consolidation.

Microsoft Finally Closes Massive Activision Blizzard Deal, Making Call Of Duty Officially Part Of Xbox Now

Minimum Competence - Daily Legal News Podcast
Minimum Competence
The idea is that this podcast can accompany you on your commute home and will render you minimally competent on the major legal news stories of the day. The transcript is available in the form of a newsletter at