Legal News for Weds 12/4 - Hunter Tax Case Dismissed, Coinbase CEO Warns Law Firms Over Hires, TX Court Blocks Corporate Transparency Act and Transgender Rights Before SCOTUS

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This Day in Legal History: Alcohol Control Administration Created

On December 4, 1933, President Franklin D. Roosevelt established the Federal Alcohol Control Administration (FACA) by executive order, a pivotal moment in the transition away from Prohibition. This action came under the National Industrial Recovery Act, as part of Roosevelt's broader New Deal agenda aimed at economic recovery. FACA was designed to regulate the burgeoning alcohol industry, which was reemerging after years of prohibition, ensuring it operated within fair competition guidelines. The administration focused on creating voluntary codes for brewers, distillers, and wineries to prevent monopolistic practices and maintain equitable market conditions.

FACA’s creation coincided with the formal repeal of Prohibition under the 21st Amendment, which took effect later that month. However, the agency’s lifespan was short-lived. By August 1935, it was replaced by the Federal Alcohol Administration (FAA) through new legislation. The FAA consolidated alcohol regulation within the Treasury Department, laying the groundwork for modern alcohol oversight. Today, the Alcohol and Tobacco Tax and Trade Bureau (TTB), a successor to the Bureau of Alcohol, Tobacco, and Firearms (ATF), continues to fulfill the regulatory role first envisioned by FACA.

The establishment and swift evolution of alcohol regulation reflect the complexities of ending Prohibition and integrating alcohol back into the economy under federal oversight.

A federal judge in California dismissed Hunter Biden's tax case but criticized the presidential pardon issued by President Joe Biden. Judge Mark C. Scarsi expressed skepticism about the validity of the pardon, noting that it was supported only by a press release and could be interpreted as covering actions beyond its signing date. He questioned the argument that the charges against Hunter were politically motivated, highlighting that the investigation was conducted under the supervision of the President’s own Department of Justice.

The judge also pointed out inconsistencies in statements by the President, who claimed his son was treated unfairly compared to others with similar tax issues. However, Hunter Biden had admitted to evading taxes while sober, contrary to claims of addiction-related leniency. Despite these critiques, Scarsi determined that the part of the pardon covering Hunter’s past conduct required dismissal of the charges in his Los Angeles tax case.

The case underscores the legal and political complexities surrounding Hunter Biden’s prosecution and the implications of presidential pardons.

Judge Slams Hunter Biden Pardon but Tosses California Tax Case

Coinbase CEO Brian Armstrong issued a warning to law firms that hiring former government officials involved in crypto enforcement could result in losing Coinbase as a client. In a Dec. 2 post, Armstrong criticized Milbank LLP for hiring Gurbir Grewal, the former SEC enforcement director who led numerous actions against crypto companies, including Coinbase. Armstrong called this move a mistake, stating Coinbase would never work with Milbank as long as Grewal was there.

Paul Grewal, Coinbase’s general counsel, supported Armstrong's stance, emphasizing the importance of holding former government lawyers accountable for their actions while in office. He hoped the statement would spark a broader conversation about the “revolving door” between Washington and private law firms. Armstrong’s post aims to influence firms not yet on Coinbase’s roster to consider the implications of their hiring choices.

At a legal panel, Gurbir Grewal defended his actions at the SEC, denying any bias against the crypto industry but acknowledging frustrations with the agency's strict enforcement. Legal experts noted that public ultimatums like Armstrong’s are rare, though private client concerns about hiring conflicts are common. Coinbase continues to navigate regulatory tensions, having been charged by the SEC in June 2023 for operating without proper registration and filing its own legal challenges against the agency.

Coinbase CEO Threatens Law Firms Over Government Hires (1)

A federal court in Texas has issued a nationwide preliminary injunction blocking the Corporate Transparency Act (CTA), which requires U.S. businesses to report their beneficial owners to the Treasury Department. Judge Amos L. Mazzant III ruled in favor of the plaintiffs, including a firearms retailer and the Libertarian Party of Mississippi, who argued that the law exceeded Congress’s constitutional authority under the Commerce Clause by targeting all incorporated entities, even those not engaged in commercial activity.

The CTA aimed to combat anonymous shell companies and deter financial crimes like money laundering and terrorism financing. However, Judge Mazzant criticized the law as a "quasi-Orwellian statute" that oversteps constitutional limits, asserting that Congress cannot mandate such disclosures solely for law enforcement purposes. He emphasized that the act does not directly regulate commerce, undermining its constitutional basis.

The injunction affects an estimated 32.6 million businesses required to comply by 2025. The Justice Department has not yet commented on the ruling. The plaintiffs were represented by S|L Law PLLC and the Center for Individual Rights in the case Texas Top Cop Shop, Inc. v. Garland.

Corporate Transparency Act Blocked Nationwide by Texas Court

The U.S. Supreme Court will hear a pivotal case on the rights of transgender minors, focusing on a Tennessee law that prohibits gender-affirming medical care such as puberty blockers and hormone therapy for those under 18. The Biden administration argues that the law violates the 14th Amendment’s equal protection clause by discriminating based on sex and transgender status. This case represents a critical examination of individual rights and the role of government in regulating personal healthcare decisions.

Tennessee defends the law as a measure to protect minors from what it calls "risky and unproven" medical treatments, citing international debates and instances of treatment regret. However, major medical associations counter that gender-affirming care is effective and can be life-saving for individuals experiencing gender dysphoria, which is linked to higher suicide rates if untreated.

The law has significant consequences for families like that of plaintiff Brian Williams, whose 16-year-old transgender child depends on this care to thrive. Advocates, including the American Civil Liberties Union and Lambda Legal, argue that the law unjustly targets vulnerable youth, while Tennessee officials claim it safeguards children.

The Supreme Court, which has a 6-3 conservative majority, will decide on the legality of this ban by June. This decision could set a precedent for similar laws in 23 other states, highlighting critical questions about equality and healthcare access for transgender individuals.

US Supreme Court set to hear major transgender rights case | Reuters

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