(Bloomberg) — Geoffrey Berman, who has investigated close allies of President Donald Trump, said he won’t step down as the U.S. Attorney in the Southern District of New York, after Attorney General William Barr said he’d be replaced with U.S. Securities and Exchange Commission Chairman Jay Clayton.Berman is “stepping down” after 2 1/2 years in the post, Barr said in a statement. He gave no further details. But shortly after that statement Berman fired back with his own on the Southern District of New York’s website.“I learned in a press release from the Attorney General tonight that I was ‘stepping down’ as United States Attorney,” Berman said. “I have not resigned, and have no intention of resigning, my position, to which I was appointed by the judges of the United States District Court for the Southern District of New York.“I will step down when a presidentially appointed nominee is confirmed by the Senate,” Berman said. “Until then, our investigations will move forward without delay or interruption.”The late Friday evening announcement from Barr caught many by surprise and raised questions about the move, including from Preet Bharara, Berman’s predecessor whom Trump fired after he refused to quit.Barr offered Berman other positions, including head of the Civil Division at Main Justice, according to a Justice Department official familiar with the matter who asked not to be named. Berman declined, the person said.“This late Friday night dismissal reeks of potential corruption of the legal process,” Senate Democratic Leader Chuck Schumer said in a statement. “What is angering President Trump? A previous action by this U.S. Attorney or one that is ongoing?”House Judiciary Committee Chairman Jerrold Nadler said on Twitter that he would invite Berman to testify at a hearing on June 24.SDNY was pursuing several probes of the president’s business and his inaugural committee. It was also investigating Rudy Giuliani, an outspoken Trump supporter, and charged two of Giuliani’s associates. In his congressional testimony, Trump’s former lawyer Michael Cohen, whose conviction on campaign finance violations and other charges was secured by SDNY prosecutors, said he was cooperating with them on matters he couldn’t discuss.In charging Cohen in late 2018, prosecutors said he acted at the direction of “Individual 1,” whom they didn’t identify. But Cohen later said that individual was Trump.Manhattan prosecutors also routinely handle the nation’s largest white-collar crime cases. The office has charged Turkey’s state-owned Halkbank with helping Iran evade sanctions on billions of dollars in oil funds. The bank has pleaded not guilty.But according to the memoir by former U.S. National Security Advisor John Bolton, Trump in 2018 told Turkey’s President Recep Tayyip Erdogan at a Group of 20 meeting that he thought Halkbank “was totally innocent of violating U.S. Iran sanctions.”“Trump then told Erdogan he would take care of things, explaining that the Southern District prosecutors were not his people,” according to Bolton. They “were Obama people, a problem that would be fixed when they were replaced by his people,” Bolton wrote.The Southern District of New York is an office that is used to high-profile cases, having won global attention a decade ago for its crackdown on insider trading. Earlier eras were defined by major prosecutions of corporate accounting cheats, terror conspirators, mafia bosses and corrupt politicos. Following the end of Robert Mueller’s investigation into Russian interference in the 2016 election, the New York office may have entered its trickiest phase, as the lead authority scrutinizing the conduct of the leader of the free world and his close associates.Berman was well-regarded as a prosecutor who acted independently. In his ongoing investigation into the late Jeffrey Epstein’s sex crimes and those who enabled his behavior, Berman this month publicly refuted a statement from Prince Andrew’s U.K. lawyers that he has repeatedly sought to talk to American investigators. In an extraordinary showdown, Berman issued his own statement that Andrew has done nothing of the kind.Craig Carpenito, currently the U.S. Attorney for the District of New Jersey, will serve as the Acting United States Attorney for the Southern District of New York, while the Senate is considering Clayton’s nomination, Barr said. That could take several weeks, and perhaps months if there is opposition to the nomination in the Senate.“The whole thing stinks,” said former U.S. Attorney Mimi Rocah. “Firing a U.S. attorney that has been working on investigations surrounding the president suddenly, and then circumventing the U.S. Attorney’s people by putting in an outside U.S. Attorney raises alarm bells.”That appointment also raised questions for Dan Goldman, a former federal prosecutor from the U.S. attorney’s office in Manhattan who served as a House Intelligence Committee lawyer who grilled a dozen witnesses during the panel’s public impeachment hearings. He said on Twitter that’s not the standard procedure.Clayton didn’t have an easy time during his 2017 confirmation hearing for SEC chairman in the Senate.Democratic Senators, including Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts, repeatedly said Clayton’s Wall Street relationships were a worry.But according to the Justice Department official, Barr has known Clayton for years and holds him in high regard. Clayton was getting ready to leave the administration and go back to New York, the person said. He expressed interest in SDNY and the Attorney General thought it was a good idea, according to the official.In his statement Barr said: “Jay has been an extraordinarily successful SEC chairman, overseeing efforts to modernize regulation of the capital markets, protect Main Street investors, enhance American competitiveness, and address challenges ranging from cybersecurity issues to the COVID-19 pandemic.”Before joining the SEC, Clayton was a partner in New York for the law firm Sullivan & Cromwell. At Sullivan & Cromwell, he earned millions of dollars representing some of the financial industry’s most well known banks and hedge funds, including Goldman Sachs Group Inc. and Pershing Square Capital Management. He also worked on the biggest initial public offering in U.S. history, helping Chinese e-commerce behemoth Alibaba Group Holding Ltd. raise $25 billion in 2014.Clayton has sought to emphasize the SEC’s role in protecting retail investors. He led Wall Street’s main regulator in taking a particularly tough stance on initial-coin offerings during the cryptocurrency craze of late 2017 and 2018.On enforcement matters, Clayton, a political independent, has been willing to penalize firms accused of wrongdoing over Republican objections. During his tenure, the agency has also rewritten conduct standards for brokers and taken steps to clamp down on fees that stock exchanges charge.An SEC spokesperson for Clayton didn’t immediately respond to e-mailed messages seeking comment.(Updates with former U.S. Attorney’s comment. An earlier version of this story corrected a quote from Bolton’s book.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
