Business
‘An Invisible Cage’: How China Is Policing the Future
The greater than 1.4 billion folks residing in China are continually watched. They’re recorded by police cameras which can be in all places, on avenue corners and subway ceilings, in resort lobbies and residence buildings. Their telephones are tracked, their purchases are monitored, and their on-line chats are censored.
Now, even their future is beneath surveillance.
The newest technology of know-how digs via the huge quantities of information collected on their each day actions to seek out patterns and aberrations, promising to foretell crimes or protests earlier than they occur. They aim potential troublemakers within the eyes of the Chinese language authorities — not solely these with a felony previous but additionally susceptible teams, together with ethnic minorities, migrant employees and people with a historical past of psychological sickness.
They will warn the police if a sufferer of a fraud tries to journey to Beijing to petition the federal government for fee or a drug consumer makes too many calls to the identical quantity. They will sign officers every time an individual with a historical past of psychological sickness will get close to a college.
It takes intensive evasive maneuvers to keep away from the digital tripwires. Up to now, Zhang Yuqiao, a 74-year-old man who has been petitioning the federal government for many of his grownup life, might merely keep off the primary highways to dodge the authorities and make his method to Beijing to combat for compensation over the torture of his dad and mom in the course of the Cultural Revolution. Now, he turns off his telephones, pays in money and buys a number of practice tickets to false locations.
Whereas largely unproven, the brand new Chinese language applied sciences, detailed in procurement and different paperwork reviewed by The New York Occasions, additional lengthen the boundaries of social and political controls and combine them ever deeper into folks’s lives. At their most elementary, they justify suffocating surveillance and violate privateness, whereas within the excessive they threat automating systemic discrimination and political repression.
For the federal government, social stability is paramount and any risk to it have to be eradicated. Throughout his decade as China’s prime chief, Xi Jinping has hardened and centralized the safety state, unleashing techno-authoritarian insurance policies to quell ethnic unrest within the western area of Xinjiang and implement a number of the world’s most extreme coronavirus lockdowns. The area for dissent, all the time restricted, is quickly disappearing.
“Massive information must be used as an engine to energy the progressive growth of public safety work and a brand new progress level for nurturing fight capabilities,” Mr. Xi stated in 2019 at a nationwide public safety work assembly.
The algorithms, which might show controversial in different international locations, are sometimes trumpeted as triumphs.
In 2020, the authorities in southern China denied a girl’s request to maneuver to Hong Kong to be along with her husband after software program alerted them that the wedding was suspicious, the native police reported. An ensuing investigation revealed that the 2 weren’t typically in the identical place on the identical time and had not spent the Spring Competition vacation collectively. The police concluded that the wedding had been faked to acquire a migration allow.
The identical 12 months in northern China, an automatic alert a few man’s frequent entry right into a residential compound with completely different companions prompted the police to analyze. They found that he was part of a pyramid scheme, in line with state media.
The small print of those rising safety applied sciences are described in police analysis papers, surveillance contractor patents and shows, in addition to a whole lot of public procurement paperwork reviewed and confirmed by The Occasions. Lots of the procurement paperwork have been shared by ChinaFile, an internet journal printed by the Asia Society, which has systematically gathered years of data on authorities web sites. One other set, describing software program purchased by the authorities within the port metropolis of Tianjin to cease petitioners from going to neighboring Beijing, was offered by IPVM, a surveillance business publication.
China’s Ministry of Public Safety didn’t reply to requests for remark faxed to its headquarters in Beijing and 6 native departments throughout the nation.
The brand new method to surveillance is partly primarily based on data-driven policing software program from the USA and Europe, know-how that rights teams say has encoded racism into choices like which neighborhoods are most closely policed and which prisoners get parole. China takes it to the acute, tapping nationwide reservoirs of information that enable the police to function with opacity and impunity.
Typically folks don’t know they’re being watched. The police face little exterior scrutiny of the effectiveness of the know-how or the actions they immediate. The Chinese language authorities require no warrants to gather private info.
On the most bleeding edge, the methods increase perennial science-fiction conundrums: How is it doable to know the longer term has been precisely predicted if the police intervene earlier than it occurs?
Even when the software program fails to infer human habits, it may be thought of profitable because the surveillance itself inhibits unrest and crime, consultants say.
“That is an invisible cage of know-how imposed on society,” stated Maya Wang, a senior China researcher with Human Rights Watch, “the disproportionate brunt of it being felt by teams of individuals which can be already severely discriminated towards in Chinese language society.”
‘Nowhere to Conceal’
In 2017, one among China’s best-known entrepreneurs had a daring imaginative and prescient for the longer term: a pc system that would predict crimes.
The entrepreneur, Yin Qi, who based Megvii, a man-made intelligence start-up, informed Chinese language state media that the surveillance system might give the police a search engine for crime, analyzing big quantities of video footage to intuit patterns and warn the authorities about suspicious habits. He defined that if cameras detected an individual spending an excessive amount of time at a practice station, the system might flag a doable pickpocket.
“It will be scary if there have been really folks watching behind the digicam, however behind it’s a system,” Mr. Yin stated. “It’s just like the search engine we use on daily basis to surf the web — it’s very impartial. It’s imagined to be a benevolent factor.”
He added that with such surveillance, “the dangerous guys have nowhere to cover.”
5 years later, his imaginative and prescient is slowly changing into actuality. Inner Megvii shows reviewed by The Occasions present how the start-up’s merchandise assemble full digital dossiers for the police.
“Construct a multidimensional database that shops faces, images, automobiles, circumstances and incident data,” reads an outline of 1 product, referred to as “clever search.” The software program analyzes the information to “dig out bizarre individuals who appear harmless” to “stifle unlawful acts within the cradle.”
A Megvii spokesman stated in an emailed assertion that the corporate was dedicated to the accountable growth of synthetic intelligence, and that it was involved about making life extra secure and handy and “not about monitoring any specific group or particular person.”
Comparable applied sciences are already being put into use. In 2022, the police in Tianjin purchased software program made by a Megvii competitor, Hikvision, that goals to foretell protests. The system collects information on legions of Chinese language petitioners, a common time period in China that describes individuals who attempt to file complaints about native officers with larger authorities.
It then scores petitioners on the probability that they may journey to Beijing. Sooner or later, the information might be used to coach machine-learning fashions, in line with a procurement doc.
Native officers need to forestall such journeys to keep away from political embarrassment or publicity of wrongdoing. And the central authorities doesn’t need teams of disgruntled residents gathering within the capital.
A Hikvision consultant declined to touch upon the system.
Beneath Mr. Xi, official efforts to regulate petitioners have grown more and more invasive. Zekun Wang, a 32-year-old member of a bunch that for years sought redress over an actual property fraud, stated the authorities in 2017 had intercepted fellow petitioners in Shanghai earlier than they may even purchase tickets to Beijing. He suspected that the authorities have been watching their communications on the social media app WeChat.
The Hikvision system in Tianjin, which is run in cooperation with the police in close by Beijing and Hebei Province, is extra refined.
The platform analyzes people’ probability to petition primarily based on their social and household relationships, previous journeys and private conditions, in line with the procurement doc. It helps the police create a profile of every, with fields for officers to explain the temperament of the protester, together with “paranoid,” “meticulous” and “quick tempered.”
Many individuals who petition achieve this over authorities mishandling of a tragic accident or neglect within the case — all of which matches into the algorithm. “Improve an individual’s early-warning threat degree if they’ve low social standing or went via a significant tragedy,” reads the procurement doc.
Automating Prejudice
When the police in Zhouning, a rural county in Fujian Province, purchased a brand new set of 439 cameras in 2018, they listed coordinates the place every would go. Some hung above intersections and others close to colleges, in line with a procurement doc.
9 have been put in exterior the houses of individuals with one thing in frequent: psychological sickness.
Whereas some software program tries to make use of information to uncover new threats, a extra frequent sort relies on the preconceived notions of the police. In over 100 procurement paperwork reviewed by The Occasions, the surveillance focused blacklists of “key individuals.”
These folks, in line with a number of the procurement paperwork, included these with psychological sickness, convicted criminals, fugitives, drug customers, petitioners, suspected terrorists, political agitators and threats to social stability. Different methods focused migrant employees, idle youths (youngsters with out college or a job), ethnic minorities, foreigners and people contaminated with H.I.V.
The authorities resolve who goes on the lists, and there may be typically no course of to inform folks after they do. As soon as people are in a database, they’re hardly ever eliminated, stated consultants, who apprehensive that the brand new applied sciences reinforce disparities inside China, imposing surveillance on the least lucky components of its inhabitants.
In lots of circumstances the software program goes additional than merely concentrating on a inhabitants, permitting the authorities to arrange digital tripwires that point out a doable risk. In a single Megvii presentation detailing a rival product by Yitu, the system’s interface allowed the police to plot their very own early warnings.
With a easy fill-in-the-blank menu, the police can base alarms on particular parameters, together with the place a blacklisted individual seems, when the individual strikes round, whether or not she or he meets with different blacklisted folks and the frequency of sure actions. The police might set the system to ship a warning every time two folks with a historical past of drug use verify into the identical resort or when 4 folks with a historical past of protest enter the identical park.
Yitu didn’t reply to emailed requests for remark.
In 2020 within the metropolis of Nanning, the police purchased software program that would search for “greater than three key folks checking into the identical or close by motels” and “a drug consumer calling a brand new out-of-town quantity incessantly,” in line with a bidding doc. In Yangshuo, a vacationer city well-known for its otherworldly karst mountains, the authorities purchased a system to alert them if a foreigner and not using a work allow spent an excessive amount of time hanging round foreign-language colleges or bars, an obvious effort to catch folks overstaying their visas or working illegally.
In Shanghai, one party-run publication described how the authorities used software program to establish those that exceeded regular water and electrical energy use. The system would ship a “digital whistle” to the police when it discovered suspicious consumption patterns.
The tactic was seemingly designed to detect migrant employees, who typically dwell collectively in shut quarters to save cash. In some locations, the police contemplate them an elusive, and infrequently impoverished, group who can carry crime into communities.
The automated alerts don’t lead to the identical degree of police response. Typically, the police give precedence to warnings that time to political issues, like protests or different threats to social stability, stated Suzanne E. Scoggins, a professor at Clark College who research China’s policing.
At occasions, the police have acknowledged outright the necessity to profile folks. “Via the applying of huge information, we paint an image of individuals and provides them labels with completely different attributes,” Li Wei, a researcher at China’s nationwide police college, stated in a 2016 speech. “For many who obtain a number of kinds of labels, we infer their identities and habits, after which perform focused pre-emptive safety measures.”
Towards Techno Totalitarianism
Mr. Zhang first began petitioning the federal government for compensation over the torture of his household in the course of the Cultural Revolution. He has since petitioned over what he says is police concentrating on of his household.
As China has constructed out its techno-authoritarian instruments, he has had to make use of spy film ways to avoid surveillance that, he stated, has change into “excessive tech and Nazified.”
When he traveled to Beijing in January from his village in Shandong Province, he turned off his cellphone and paid for transportation in money to attenuate his digital footprint. He purchased practice tickets to the incorrect vacation spot to foil police monitoring. He employed personal drivers to get round checkpoints the place his identification card would set off an alarm.
The system in Tianjin has a particular function for folks like him who’ve “a sure consciousness of anti-reconnaissance” and recurrently change autos to evade detection, in line with the police procurement doc.
Whether or not or not he triggered the system, Mr. Zhang has observed a change. Every time he turns off his cellphone, he stated, officers present up at his home to verify that he hasn’t left on a brand new journey to Beijing.
Even when police methods can not precisely predict habits, the authorities could contemplate them profitable due to the risk, stated Noam Yuchtman, an economics professor on the London Faculty of Economics who has studied the influence of surveillance in China.
“In a context the place there isn’t actual political accountability,” having a surveillance system that incessantly sends cops “can work fairly properly” at discouraging unrest, he stated.
As soon as the metrics are set and the warnings are triggered, cops have little flexibility, centralizing management. They’re evaluated for his or her responsiveness to automated alarms and effectiveness at stopping protests, in line with consultants and public police reviews.
The know-how has encoded energy imbalances. Some bidding paperwork consult with a “purple checklist” of individuals whom the surveillance system should ignore.
One nationwide procurement doc stated the operate was for “individuals who want privateness safety or V.I.P. safety.” One other, from Guangdong Province, acquired extra particular, stipulating that the purple checklist was for presidency officers.
Mr. Zhang expressed frustration on the methods know-how had lower off these in political energy from common folks.
“The authorities don’t significantly remedy issues however do no matter it takes to silence the individuals who increase the issues,” he stated. “This can be a huge step backward for society.”
Mr. Zhang stated that he nonetheless believed within the energy of know-how to do good, however that within the incorrect arms it could possibly be a “scourge and a shackle.”
“Up to now should you left your private home and took to the countryside, all roads led to Beijing,” he stated. “Now, all the nation is a internet.”
Isabelle Qian and Aaron Krolik contributed analysis and reporting. Manufacturing by Agnes Chang and Alexander Cardia.
Business
Elon Musk, Mark Zuckerberg and Jeff Bezos to Attend Trump’s Inauguration
Bezos, Zuckerberg and Coke at the inauguration
Corporate America had already raced to donate big sums to Donald Trump’s record-breaking inaugural fund. Now some of its leaders appear eager to jockey for prominent positions at the inauguration next week.
It’s a new reminder that for some of the nation’s biggest businesses, forging close ties to a president-elect who is promising hard-hitting policies like tariffs is a priority this time around.
Jeff Bezos and Mark Zuckerberg are expected to be on the inauguration dais, according to NBC News, alongside Elon Musk and several cabinet picks.
The presence of Musk isn’t a surprise, given the Tesla chief’s significant support of and huge influence over Trump. But the other tech moguls have only more recently been seen as supporters of the administration. (Indeed, Bezos frequently sparred with Trump during his first presidential term.)
It’s the latest effort by Bezos and Zuckerberg to burnish their Trump credentials. At the DealBook Summit in December, Bezos — whose Amazon has faced scrutiny under the Biden administration and whose Blue Origin is hoping to win government rocket contracts — said that he was “very hopeful” about Trump’s efforts to reduce regulation.
And Zuckerberg recently announced significant changes to Meta’s content moderation policy, including relaxing restrictions on speech seen as protecting groups including L.G.B.T.Q. people that won praise from Trump and other conservatives. On the inauguration front, Zuckerberg is also co-hosting a reception alongside the longtime Trump backers Miriam Adelson, Tilman Fertitta and Todd Ricketts.
Both tech moguls have visited Mar-a-Lago since the election, with Zuckerberg having done so more than once.
Coca-Cola took a different tack. The drinks giant’s C.E.O., James Quincey, gave Trump what an aide called the “first ever Presidential Commemorative Inaugural Diet Coke bottle.”
More broadly, business leaders want a piece of the inauguration action. The Times previously reported that the Trump inaugural fund had surpassed $170 million, a record, and that even major donors have been wait-listed for events.
Others are throwing unofficial events around Washington, including an “Inaugural Crypto Ball” that will feature Snoop Dogg, with tickets starting at $5,000, The Wall Street Journal reports.
It’s a reminder that C.E.O.s are reading the room, and preparing their companies for a president who has proposed creating an “External Revenue Service” to oversee what he has promised will be wide-ranging tariffs.
David Urban, a longtime Trump adviser who’s hosting a pre-inauguration event, told The Journal, “This is the world order, and if we’re going to succeed, we need to get with the world order.”
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In other Trump news: The president-elect is expected to appear via videoconference at the World Economic Forum in Davos, Switzerland, which starts on Inauguration Day, according to Semafor.
HERE’S WHAT’S HAPPENING
Investors brace for the latest inflation data. The Consumer Price Index report, due out at 8:30 a.m. Eastern, is expected to show that inflation ticked up last month, most likely because of climbing food and fuel costs. Global bond markets have been rattled as slow progress on slowing inflation has prompted the Fed to slash its forecast for interest rate cuts.
More Trump cabinet picks will appear before the Senate on Wednesday. Senator Marco Rubio of Florida, the choice for secretary of state, is expected to field questions about his views on the Middle East, Ukraine and China, but is expected to be confirmed. Russell Vought, the pick to run the Office of Management and Budget, will most likely be asked about his advocacy for drastically shrinking the federal government, a key Trump objective. And Sean Duffy, the Fox Business host chosen to lead the Transportation Department, will probably face questions on how he would oversee matters including aviation safety and autonomous vehicles, the latter of which is a priority for Elon Musk.
Meta plans to lay off another 5 percent of its employees. Mark Zuckerberg, the tech giant’s C.E.O., told staff members to prepare for “extensive performance-based cuts” as the company braces for “an intense year.” The social media giant faces intense competition in the race to commercialize artificial intelligence.
A new bill would give TikTok a reprieve from a ban in the United States. Senator Ed Markey, Democrat of Massachusetts, said he planned to introduce the Extend the TikTok Deadline Act, which would give the video platform 270 additional days to be divested from its Chinese parent, ByteDance before being blacklisted. It’s the latest effort to buy TikTok time, as the app faces a Jan. 19 deadline set by a law; President-elect Donald Trump has opposed the potential ban as well.
A question of succession
JPMorgan Chase and BlackRock, the giant money manager, just reported earnings. (In short: Both handily beat analyst expectations.)
But the Wall Street giants are likely to face questioning on a particular issue on Wednesday: Which top lieutenants are in line to replace their larger-than-life C.E.O.s, Jamie Dimon and Larry Fink.
Who’s out:
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Daniel Pinto, who had long been Dimon’s right-hand man, said he would officially drop his responsibilities as JPMorgan’s C.O.O. in June and retire at the end of 2026. Jenn Piepszak, the co-C.E.O. of the company’s core commercial and investment bank, has become C.O.O.
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And Mark Wiedman, the head of BlackRock’s global client business and a top contender to succeed Fink, is planning to leave, according to news reports.
What Wall Street is gossiping about JPMorgan: Even in taking the C.O.O. role, JPMorgan said that Piepszak wasn’t interested in succeeding Dimon “at this time.” DealBook hears that while she genuinely appears not to want to pursue the top job, the phrasing covers her in case she changes her mind.
For now, that means the most likely candidates for the top spot are Marianne Lake, the company’s head of consumer and community banking; Troy Rohrbaugh, the other co-head of the commercial and investment bank; and Doug Petno, a co-head of global banking.
The buzz around BlackRock: Wiedman reportedly didn’t want to keep waiting to succeed Fink and is expected to seek a C.E.O. position elsewhere. (So sudden was his departure that he’s forfeiting about $8 million worth of stock options and, according to The Wall Street Journal, he doesn’t have another job lined up yet.)
Fink said on CNBC on Wednesday that Wiedman’s departure had been in the works for some time, with the executive having expressed a desire to leave about six months ago.
Other candidates to take over for Fink include Martin Small, BlackRock’s C.F.O.; Rob Goldstein, the firm’s C.O.O.; and Rachel Lord, the head of international.
But Dimon and Fink aren’t going anywhere just yet. Dimon, 68, said only last year that he might not be in the role in five years. And Fink, 72, said in July that he was working on succession planning: “When I do believe the next generation is ready, I’m out.”
The S.E.C. gets in a final shot at Musk
Another battle between Elon Musk and the S.E.C. erupted on Tuesday, with the agency suing the tech mogul over his 2022 purchase of Twitter.
It’s unclear what happens to the lawsuit once President-elect Donald Trump, who counts Musk as a close ally, takes office. But the agency’s reputation as an independent watchdog may be at stake.
A recap: The S.E.C. accused Musk of violating securities laws in his $44 billion acquisition of the social media company.
The agency said that Musk had failed to disclose his Twitter ownership stake for a pivotal 11-day stretch before revealing his intentions to purchase the company. That breach allowed him to buy up at least $150 million worth of Twitter shares at a lower price — to the detriment of existing shareholders, the agency argues.
The S.E.C. isn’t just seeking to fine Musk. It wants him to pay back the windfall. “That’s unusual,” Ann Lipton, a professor at Tulane Law School, told DealBook.
Alex Spiro, Musk’s lawyer, called the latest action a “sham” and accused the agency of waging a “multiyear campaign of harassment” against him.
The showdown sets up a tough question for the S.E.C. Will Paul Atkins, the president-elect’s widely respected pick to lead the agency, drop the case? Such a move could call the bedrock principle of S.E.C. independence into question.
Jay Clayton, who led the agency during Trump’s first term, earned the respect of the business community for running it in a largely drama-free manner. It was under Clayton that the S.E.C. sued Musk over his statements about taking Tesla private.
Musk, who is set to become Trump’s cost-cutting czar and is expected to have office space in the White House complex, has called for the “comprehensive overhaul” of agencies like the S.E.C. The billionaire said he would also like to see “punitive action against those individuals who have abused their regulatory power for personal and political gain.”
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In related news: The Consumer Financial Protection Bureau sued Capital One, accusing it of cheating its depositors out of $2 billion in interest payments.
THE SPEED READ
Deals
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DAZN, the streaming network backed by the billionaire businessman Len Blavatnik, is closing in on funding from Saudi Arabia’s sovereign wealth fund as the kingdom continues to expand its sports footprint. (NYT)
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The Justice Department sued KKR, accusing the investment giant of withholding information during government reviews for several of its deals. KKR filed a countersuit. (Bloomberg)
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OpenAI added Adebayo Ogunlesi, the billionaire co-founder of the infrastructure investment firm Global Infrastructure Partners, to its board. (FT)
Politics and policy
Best of the rest
We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.
Business
For uninsured fire victims, the Small Business Administration offers a rare lifeline
As wildfires continue to burn around Southern California, thousands of business owners, homeowners and renters are confronting the daunting challenge of rebuilding from the ashes. For some number of them, the road ahead will be all the more difficult because they didn’t have any or enough insurance to cover their losses. For them, the U.S. Small Business Administration is a possible lifeline.
The SBA, which offers emergency loans to businesses, homeowners, renters and nonprofits, is among the few relief options for those who don’t have insurance or are underinsured. Uninsured Angelenos can also apply for disaster assistance through the Federal Emergency Management Agency, or FEMA.
The current wildfires are ravaging a state that was already in the midst of a home insurance crisis. Thousands of homeowners have lost their insurance in recent years as providers pull out of fire-prone areas and jack up their prices in the face of rising risk.
“For those who are not going to get that insurance payout, this is available,” Small Business Administration head Isabella Casillas Guzman said in an interview during a recent trip to the fire areas. “The loans are intended to fill gaps, and that is very broad.”
About one-third of businesses don’t have insurance and three-quarters are underinsured, Guzman said.
“There will be residual effects around the whole community,” she said. “Insurance will not cover this disaster.”
Businesses, nonprofits and small agricultural cooperatives can apply for an economic injury loan or a physical damage loan through SBA. Homeowners are eligible for physical damage loans. Economic injury loans are intended to help businesses meet ordinary financial demands, while physical damage loans provide funds for repairs and restoration. People can apply online and loans must be repaid within 30 years.
Renters can receive up to $100,000 in assistance, homeowners up to $500,000 and businesses up to $2 million, according to Guzman. Homeowners and renters who cannot get access to credit elsewhere can qualify for loans with a interest rate of 2.5%. The SBA determines an applicant has no credit available elsewhere if they do not have other funds to pay for disaster recovery and cannot borrow from nongovernment sources.
Interest rates for homeowners and renters who do have access to credit elsewhere are just over 5%. Loans for businesses could come with interest rates of 4% or 8% depending on whether the business has other credit options.
An applicant must show they are able to repay their loan and have a credit history acceptable to the SBA in order to be approved. The loans became available following President Biden’s declaration of a major disaster in California.
“We’ve already received hundreds of applications from individuals and businesses interested in exploring additional support,” Guzman said. “We know the economic disruption may not be contained to the footprint of any evacuation zones or power outages.”
People who don’t have insurance or whose insurance doesn’t cover the entirety of their losses are eligible for loans, Guzman said. While many will use the funds to start from scratch after losing their property to the fires, businesses that are still standing can also apply for support to cover lost revenue.
Guzman was not able to estimate the total value of loans they expect to offer in California but said the organization is on solid financial footing after temporarily running out of funds in October.
“Funding has been replenished by Congress, and we expect to be able to coordinate closely with Congress,” Guzman said. “We’re fully funded and in a good position to provide support.”
Business
Cookies, Cocktails and Mushrooms on the Menu as Justices Hear Bank Fraud Case
In a lively Supreme Court argument on Tuesday that included references to cookies, cocktails and toxic mushrooms, the justices tried to find the line between misleading statements and outright lies in the case of a Chicago politician convicted of making false statements to bank regulators.
The case concerned Patrick Daley Thompson, a former Chicago alderman who is the grandson of one former mayor, Richard J. Daley, and the nephew of another, Richard M. Daley. He conceded that he had misled the regulators but said his statements fell short of the outright falsehoods he said were required to make them criminal.
The justices peppered the lawyers with colorful questions that tried to tease out the difference between false and misleading statements.
Chief Justice John G. Roberts Jr. asked whether a motorist pulled over on suspicion of driving while impaired said something false by stating that he had had one cocktail while omitting that he had also drunk four glasses of wine.
Caroline A. Flynn, a lawyer for the federal government, said that a jury could find the statement to be false because “the officer was asking for a complete account of how much the person had had to drink.”
Justice Ketanji Brown Jackson asked about a child who admitted to eating three cookies when she had consumed 10.
Ms. Flynn said context mattered.
“If the mom had said, ‘Did you eat all the cookies,’ or ‘how many cookies did you eat,’ and the child says, ‘I ate three cookies’ when she ate 10, that’s a false statement,” Ms. Flynn said. “But, if the mom says, ‘Did you eat any cookies,’ and the child says three, that’s not an understatement in response to a specific numerical inquiry.”
Justice Sonia Sotomayor asked whether it was false to label toxic mushrooms as “a hundred percent natural.” Ms. Flynn did not give a direct response.
The case before the court, Thompson v. United States, No. 23-1095, started when Mr. Thompson took out three loans from Washington Federal Bank for Savings between 2011 and 2014. He used the first, for $110,000, to finance a law firm. He used the next loan, for $20,000, to pay a tax bill. He used the third, for $89,000, to repay a debt to another bank.
He made a single payment on the loans, for $390 in 2012. The bank, which did not press him for further payments, went under in 2017.
When the Federal Deposit Insurance Corporation and a loan servicer it had hired sought repayment of the loans plus interest, amounting to about $270,000, Mr. Thompson told them he had borrowed $110,000, which was true in a narrow sense but incomplete.
After negotiations, Mr. Thompson in 2018 paid back the principal but not the interest. More than two years later, federal prosecutors charged him with violating a law making it a crime to give “any false statement or report” to influence the F.D.I.C.
He was convicted and ordered to repay the interest, amounting to about $50,000. He served four months in prison.
Chris C. Gair, a lawyer for Mr. Thompson, said his client’s statements were accurate in context, an assertion that met with skepticism. Justice Elena Kagan noted that the jury had found the statements were false and that a ruling in Mr. Thompson’s favor would require a court to rule that no reasonable juror could have come to that conclusion.
Justices Neil M. Gorsuch and Brett M. Kavanaugh said that issue was not before the court, which had agreed to decide the legal question of whether the federal law, as a general matter, covered misleading statements. Lower courts, they said, could decide whether Mr. Thompson had been properly convicted.
Justice Samuel A. Alito Jr. asked for an example of a misleading statement that was not false. Mr. Gair, who was presenting his first Supreme Court argument, responded by talking about himself.
“If I go back and change my website and say ‘40 years of litigation experience’ and then in bold caps say ‘Supreme Court advocate,’” he said, “that would be, after today, a true statement. It would be misleading to anybody who was thinking about whether to hire me.”
Justice Alito said such a statement was, at most, mildly misleading. But Justice Kagan was impressed.
“Well, it is, though, the humblest answer I’ve ever heard from the Supreme Court podium,” she said, to laughter. “So good show on that one.”
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