For decades, prosecutors in the Southern District of New York have cherished their reputation for two things: taking on the most high-stakes cases, and doing so with little constraint from Washington.
They prosecuted Wall Street financiers Michael Milken and Bernard Madoff, crypto founder Sam Bankman-Fried and executives from Steve Cohen’s SAC Capital hedge fund. They have secured guilty pleas from foreign companies such as Glencore and Danske Bank.
During Donald Trump’s first term, prosecutors at the US Attorney’s Office for the Southern District of New York — which is widely known by its acronym SDNY — got the president’s lawyer Michael Cohen jailed.
They even investigated, although did not charge, another of his lawyers, Rudy Giuliani — who had himself been the head of SDNY for much of the 1980s.
But since Trump returned to power in January, he has put intense pressure on the Department of Justice, openly urging it to investigate his political opponents. That culminated on Thursday with the indictment of former FBI director James Comey, who also once ran SDNY.
SDNY prosecutors say that as a result of the new political climate, the independence of the office has been eroded like never before.
So far this year, some of its most senior staff have resigned or been fired after refusing to follow orders from Washington. The DoJ has intervened directly in its work, including over New York City mayor Eric Adams and Jeffrey Epstein’s co-conspirator Ghislaine Maxwell, in ways that once seemed unthinkable.
The administration has made it clear that it wants white-collar crime, one of the office’s specialities, to be prosecuted more sparingly.
Inside the office, prosecutors are demoralised. Many are worried that their cases will be killed not because of a lack of evidence but because of pressure from those in power, a fear many said they had not experienced before. Some say they are hampered by changes such as the diversion of FBI agents to immigration enforcement.
Preliminary data about SDNY’s cases supports some of these fears. So far this year SDNY, which is now led by former Apollo Global Management chair Jay Clayton, has brought fewer criminal cases than at any time in at least a decade and the pace of its public announcements has slowed significantly.
This account of its operations is based on conversations with more than two dozen current and former SDNY prosecutors, criminal defence lawyers and others affected by its cases, and data analysis by the FT.
Speaking after the DoJ in July fired long-serving SDNY prosecutor Maurene Comey, who is the daughter of James Comey, one former prosecutor put it particularly starkly: “In this era, there is no independence.”
The workings of SDNY are an important window into the functioning of the US judicial system in Trump’s second term. Given the high-profile cases it takes on, SDNY will be a vital test of the level of political interference from the administration into prosecutions.
They also provide a barometer for the enforcement of white-collar crime — an area where SDNY plays a vital international role given how much of global finance flows through its territory.
The SDNY attorney’s office declined to comment. The DoJ said: “Department leadership has an obligation to ensure all DoJ prosecutors are advancing the enforcement priorities set by the attorney-general.” The White House referred questions to the DoJ.
The SDNY office is “the most conspicuously independent” of its kind, says Daniel Richman, a former prosecutor in the office and a professor at Columbia Law School.
That reputation has made it “a place where the administration wanted to demonstrate its authority . . . with an eye to communicating to federal prosecutors everywhere that autonomy would be suppressed”, he says of the first months of the administration. The result is that SDNY is now just one of “a parade of offices that they are demanding absolute loyalty from”.
The SDNY office is a unit of the DoJ, which is led by attorney-general Pam Bondi. But it traces its roots back to 1789, and almost a century before the DoJ was created.
It prides itself on doing its own thing in a way that can frustrate Washington — as well as prosecutors elsewhere in the US and around the world that could claim jurisdiction over the cases it brings.
Its confidence can seem like arrogance: it is referred to, sometimes disapprovingly but sometimes with pride, as the “sovereign district of New York”. It has policed global finance with a vigour that other countries do not always apply, pursuing alleged wrongdoing that took place far from America.
It is not short of critics. Some say it should have done more to jail bankers over the 2008 financial crisis. Others say its prosecutors can be too aggressive because they want to make a name for themselves quickly before moving to more lucrative jobs at law firms. But few would call it timid.
“What made the SDNY so powerful is the fearlessness with which we were allowed to operate, which came from the idea no one was going to mess with us because our cases were so strong,” says one former prosecutor. “We just thought the world was eligible for enforcement because everything touches New York,” says another.
From the early days of the second Trump term, there have been signs of open political interference.
In February, Emil Bove, then acting deputy attorney-general — who had previously been an SDNY prosecutor and also Trump’s lawyer — ordered the office to drop its bribery case against New York City mayor Eric Adams.
SDNY’s interim leader, Danielle Sassoon, just weeks into the role, resigned rather than follow the instruction to drop the case. The DoJ put two SDNY prosecutors who had worked on the Adams case on leave. One of them, Hagan Scotten, resigned the next day.
Bove told a court that the prosecution of Adams was “interfering with national security and immigration enforcement”. Adams has denied making any deal with Trump to crack down on illegal immigration in exchange for the charges being dropped.
A few weeks later, two more prosecutors in the Adams case were put on leave. In a highly unusual move, an official from the US Marshals Service walked them out of the building. “It was all part of the messaging that we [the DoJ] have complete and utter control over you,” says one person with knowledge of the events.
In early April, the Adams case was dismissed. Soon after, on Clayton’s first day in charge, the three prosecutors on leave resigned. In a letter to Todd Blanche, Trump’s former lawyer who is deputy attorney-general, they said the DoJ had signalled that in order to return to work they must admit SDNY was wrong to refuse to drop the case. “We will not confess wrongdoing when there was none,” they wrote.
The DoJ has intervened in an even more high-profile case — Epstein. SDNY, with Maurene Comey playing a leading role, had prosecuted Epstein and Maxwell. In mid-July, under political pressure over his links to Epstein, Trump called for the release of grand jury transcripts about the case. Such documents contain information presented to decide whether a person can be charged, and are usually confidential. Any request to unseal grand jury transcripts would typically be signed by the prosecutors involved in the case, or at least by their office.
On July 16, while questions about the Epstein case were making headlines, Comey was fired.
Two days later, a request to unseal the transcripts was filed in court. It was not signed by anyone from SDNY; instead it bore the names Pam Bondi and Todd Blanche. Days later, Blanche himself interviewed Maxwell in jail without any of the SDNY prosecutors involved in the case present.
In September, Comey sued the DoJ, saying that when she asked her boss, Clayton, why she was being fired, he told her: “All I can say is it came from Washington.”
It is common for the DoJ to set broad, strategic priorities for prosecutors’ offices nationwide, including SDNY — from organised crime cases in the 1980s to sanctions violations under Joe Biden.
And it is not unknown for the head of the office to have close relationships with Washington: SDNY’s Biden-era boss, Damian Williams, was close to then attorney-general Merrick Garland, for whom he had clerked years earlier when Garland was a judge.
There was interference during Trump’s first term too. Geoffrey Berman, who ran the office at that time, later wrote a book outlining such incidents. They included attempts to interfere in the Cohen case, efforts to target political enemies and the announcement of Berman’s resignation when he had not offered it. Berman did not respond to requests for comment. And during the Biden administration, the DoJ seemed to keep a closer eye on the office than before, according to some SDNY prosecutors who were there at the time.
But this time around, “what has happened has far surpassed anything that happened in the first Trump administration”, says one of the people.
Away from the noise around the Adams, Epstein and Comey episodes, problems have started to creep in its day-to-day work.
Several prosecutors say they never used to worry that criminal defendants and their lawyers would be able to get SDNY cases thrown out or altered by going over their heads to the DoJ or the White House, since there were processes in place to handle such attempts. However, they say that they are worried that these guardrails will not hold in Trump’s second term.
In the early days of the administration, it seemed that “almost anybody who sent a letter” to the deputy attorney-general’s office could get someone from that office to look at their case, says one of the people. This had the effect of freezing much of SDNY’s work on the cases involved.
“You can’t maintain the force you have, and the leverage you have, if there’s an idea [among those being investigated] that if you don’t like the answer from the SDNY you call Todd Blanche . . . and get a different result,” another person says.
In June, DoJ official Matthew Galeotti made a speech that some saw as an attempt to stop this practice. He warned lawyers to “be conscientious” about challenging prosecutors’ decisions: “Seeking premature relief, mischaracterising prosecutorial conduct . . . actively undermines our system.”
Prosecutors say the use of pardons is also affecting their cases.
Plenty of presidents have issued controversial pardons, including Biden for his son Hunter, but Trump has this year used the prerogative widely and sometimes for people who have supported him or donated to his campaign.
Trevor Milton, the founder of electric-truck maker Nikola who donated about $2mn to Pacs supporting Trump in the 2024 presidential election, was pardoned in March. Milton, who had been convicted of fraud, said at the time that his pardon was about “every American who has been railroaded by the government”.
Defence lawyers say clients are shifting resources from fighting their cases to trying to get pardons. According to some prosecutors, it is getting harder to persuade victims and potential co-operating witnesses to share information because those people fear that even if their help led to a successful conviction, the perpetrator could be pardoned.
“The readiness to grant pardons or clemency to well-connected defendants willing to invest the effort means that the shadow of purchased influence looms over every [prosecutor] trying to build a case against those defendants,” Richman, the Columbia Law School professor, told a conference in May.
An added complication has come from the administration’s focus on deportations. One result is that it can be harder to give some potential co-operating witnesses — those without US citizenship — the confidence that they would be kept safe in return for their help. In the past, prosecutors had been able to assure those people that they would seek to protect them from, for example, being deported to a place where the gang they had reported on could find and target them.
Within SDNY, there has not been any major reassignment of prosecutors to immigration cases or other Trump priorities. But the office relies on working with other agencies such as the FBI and Homeland Security Investigations. Agents from those agencies have become less available for SDNY cases because they have been shifted to immigration enforcement, the people say.
Another shadow hanging over SDNY is the perception that the Trump administration is less willing to prosecute some cases — especially when it comes to white-collar crime.
In May, Galeotti set out his priorities in a memo that said “unchecked corporate and white-collar enforcement burdens US businesses and harms US interests”. He added that prosecutors “must avoid over-reach that punishes risk-taking and hinders innovation”. The government has scaled back enforcement when it comes to foreign bribery and some cryptocurrency-related cases.
So far this year, just 931 criminal cases have been filed in the southern district, the lowest level in at least a decade, according to a Financial Times analysis of court dockets covering the year to September 25. Just 9 per cent of those cases have included one of a series of fraud charges — a rough proxy for white-collar crime — the lowest level since 2017, during Trump’s first term.
One way to measure the office’s higher-profile cases is to look at its own public statements — which are issued on matters it deems important.
The FT has used artificial intelligence tools to categorise all the press releases the office has issued since 2013. So far this year, it has issued 209 press releases relating to taking action against crime, with 106 of them relating to crimes with a white-collar or fraud-related component. This is both a marked drop on previous years and a record low share for fraud-related cases.
SDNY leaders have pushed back against the suggestion that it is no longer so focused on white-collar crime.
Amanda Houle, chief of the criminal division of SDNY, said during a panel discussion this month that the securities fraud unit — one of many departments within the organisation — was on track to have charged more cases by October than it charged “in all of 2023 and 2024 combined”.
“Any narrative out there that there’s been any sort of retreat from white-collar enforcement is just wrong,” she said.
For critics of the Trump administration, the decision to indict James Comey is an example of crude politicisation of the DoJ. But outside pressure can also have a more subtle impact, causing prosecutors to second-guess their judgment at each stage in a case.
One of the cases where many of these issues have come to a head involves Roman Storm, a software developer in his mid-thirties who was put on trial in New York this summer.
Storm co-founded Tornado Cash, a cryptocurrency “mixing” service that can obscure the source of crypto funds. SDNY prosecutors say that by doing so he had enabled criminals including North Korean hackers to launder more than $1bn in dirty money. He pleaded not guilty.
Before the trial, there was an intense push from the crypto industry to get the case thrown out. Executives spoke to both the White House and the DoJ about this, going over the heads of SDNY prosecutors. The DoJ had already signalled that it was keen to change the nature of crypto enforcement. In April Blanche published a memo saying the department had pursued a “reckless strategy of regulation by prosecution” and this was going to change.
Behind the scenes, SDNY prosecutors had to fight to keep their case on track. After what is described in court filings as a “review”, they dropped an allegation about not registering with a unit of the Treasury department that combats money laundering. But the trial did go ahead.
Last month, after days of deliberations, the jurors found Storm guilty on one count, but on two more serious counts they were hung.
That leaves SDNY with the dilemma of whether to retry Storm — and a new test of its independence.
Prosecutors often push for a retrial on counts on which a jury could not agree and in this case some at SDNY believe it is the right thing to do.
However, it is likely to lead to a fresh pushback from the crypto industry, parts of which are helping to fund Storm’s legal defence. “These charges should not be reprosecuted and we would put our full weight behind Roman Storm again [if they were],” says Laura Sanders, senior counsel for the Blockchain Association.
Weeks after Storm’s conviction, Galeotti told a technology conference that the DoJ would limit prosecutions of crypto executives over the operation of unlicensed money transmitting businesses — the count that Storm has been convicted of. Storm has signalled he may challenge his conviction.
In a separate crypto-related case, SDNY prosecutors have hesitated about whether to investigate because of possible, if loose, connections to the White House, according to a person with knowledge of the matter.
A civil lawsuit in the southern district centres on the memecoin $LIBRA, which surged after Argentina’s President Javier Milei posted about it on social media in February, and later crashed. The civil case alleges a “pump and dump”; one of the defendants, Hayden Davis, says the evidence is “basically non-existent”. (Milei is not a defendant.)
The lawsuit includes a brief reference to the first lady, saying Davis said in an interview that he was also “part of” Melania Trump’s memecoin, $MELANIA, whose value also surged then quickly fell. The filing makes no allegation of wrongdoing in the Melania case.
According to the person with knowledge of the matter, the passing Melania reference had been enough, in the current climate, to make SDNY prosecutors uncertain about whether to look into the $LIBRA case to see whether there was any potential criminal wrongdoing. It is not clear if any such work is taking place.
Given the different political pressures now descending on SDNY, a lot will rest on the leadership of Clayton.
So far, he has had a mixed reception. As well as having no experience as a prosecutor, he made his name as a deals lawyer rather than a litigator. His previous roles include being a partner at the elite law firm Sullivan & Cromwell and chair of Apollo, though during Trump’s first term he gained regulatory experience as head of the Securities and Exchange Commission.
Clayton has his critics because he has never been a prosecutor. But they add that he is a far cry from Trump’s picks for the heads of some other US federal prosecutors’ offices, such as New Jersey’s Alina Habba and Washington’s Jeanine Pirro, both vocal Trump supporters.
Many regard Clayton as being distant enough from Trump, and having enough gravitas, to be the office’s best hope for preserving its norms at a turbulent time. For some, that faith was eroded when Clayton did not publicly spring to Maurene Comey’s defence.
“Clayton is Trump’s pick and you’d think he’d have a level of influence with [the DoJ],” one of the people says. “Either he does, and didn’t use it [to protect Comey], or he doesn’t have it.”
Others believed Clayton made a strategic move by keeping quiet, since speaking up in public might have led to his own firing and possible replacement with someone who might actively try to thwart the office’s work.
But there is scepticism about that argument, too. One former prosecutor says there was a risk that under Clayton, SDNY was losing its independence “politely and quietly, and acquiescing in small steps”.
Either way, the message from Comey’s firing was that “your own leadership may not be able to protect you if they [the DoJ] want you fired,” one former SDNY employee says. “You have prosecutors who are afraid. You never want a prosecutor who’s afraid.”
So far this year, six prosecutors have left SDNY as a result of a public conflict with the DoJ — five in the Eric Adams case, and Comey. Almost all had at some point held a senior position, as the head of one of its units or, in Sassoon’s case, its leader. While that marks a loss of resources, there has not been a wider exodus from the office, which has more than 200 prosecutors.
Partly, this is because it is a difficult time to get jobs at large law firms, since white-collar crime is being prosecuted more sparingly.
But some are also staying because of loyalty to the institution and a sense that they need to protect its way of operating as much as they can.
“People love that institution, they believe in that institution, I can’t convey how strongly held that is,” a former employee says. Being an SDNY prosecutor “becomes part of your being, who you are”.
Another says there is a mentality that “we occupy every single one of these seats until they force us out” because “every chair you vacate is one they fill”.
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