Tag: exclusive

By Amelia Twyman
National

WASHINGTON — A group of 16 U.S. Senate Democrats is calling on the Commodity Futures Trading Commission to tighten its regulation of prediction markets, citing concerns over insider trading and other consumer harms as betting on future events grows in popularity.

The senators, led by Agriculture, Nutrition and Forestry Committee ranking Democrat Amy Klobuchar, of Minnesota, asked the CFTC to offer guidance to those participating in bustling prediction markets such as Kalshi and Polymarket in an effort to restrict event contract manipulation and insider trading, according to the June 1 letter.

“The volume of event contracts trading on prediction markets has grown exponentially over the past 18 months,” the senators wrote. “These markets have a significantly higher proportion of retail participants than traditional derivatives markets, heightening customer protection concerns.”

The senators sent the letter before the CFTC proposed rules Wednesday that would ban bets on war, assassination and other extreme events, which critics said did not do enough to rein in the industry.

Lawmakers also want the CFTC to conduct detailed reviews of participating futures markets to ensure that their policies and procedures are clearly outlined and that they are equipped with adequate resources to prevent market abuse.

On a similar note, they wrote that the commission should instruct the markets to monitor the terms and conditions of event contracts, as ambiguous contract language can lead to conflicts over resolution and payout once an outcome has occurred.

“Sufficient resources should be devoted to anticipating and addressing such issues prior to contract listing, rather than after problems arise,” the senators wrote.

In addition to Klobuchar, the letter was signed by Sens. Lisa Blunt Rochester and Chris Coons of Delaware, Elissa Slotkin of Michigan, John Hickenlooper and Michael Bennet of Colorado, Dick Durbin of Illinois, Richard Blumenthal of Connecticut, Sheldon Whitehouse of Rhode Island, Ben Ray Luján of New Mexico, Cory Booker and Andy Kim of New Jersey, Chris Van Hollen of Maryland, Raphael Warnock of Georgia, John Fetterman of Pennsylvania and Kirsten Gillibrand of New York.

Concerns around insider trading

Prediction markets allow consumers to bet on the outcomes of future events and trade in products commonly called event contracts.

Most event contracts offer two possible outcomes, presenting traders with the option to bet either “yes” or “no.” The price of each outcome at any given time, expressed as a fraction of a dollar, corresponds to the market’s forecast of an outcome occurring, with $1 meaning 100%. Consumers who correctly predict an outcome then earn a profit equal to the difference between the price at which they bought and the end fixed payout, typically $1, according to the CFTC.

That system leaves the markets vulnerable to manipulation by people with inside knowledge of an event, which is partly what prompted the Democratic senators to write the letter, they said.

For example, a U.S. soldier was charged in April with making more than $400,000 on Polymarket by betting the United States would launch a military operation to capture Venezuelan President Nicolás Maduro. Prosecutors say the soldier used classified information to make the wagers in advance of the operation.

The senators did not give the CFTC a deadline to carry out their requests. Rather, they urged the commission in their letter to consider their recommendations as it continues to “develop rules and guidance for the prediction market industry.”

The CFTC did not respond to States Newsroom’s request for comment in time for publication.

By Ashley Murray
National

WASHINGTON — A federal judge denied a temporary restraining order Wednesday on President Donald Trump’s nearly $1.8 billion “anti-weaponization” fund, saying the issue is moot after acting Attorney General Todd Blanche said last week the administration is “not moving forward” with the controversial plan.

U.S. District Judge Richard Leon said during an afternoon hearing he’s “not persuaded that such a live controversy exists.” Leon said he was relying on Blanche’s public statements and DOJ’s court filings as proof the fund is dead.

The legal advocacy group Citizens for Responsibility and Ethics in Washington, or CREW, brought the lawsuit just days after Blanche issued the May 18 order to establish the fund, in the amount of $1.776 billion, for “victims of lawfare.”

Nikhel Sus, senior counsel for CREW, argued Blanche’s June 2 statements to the House Appropriations Committee are “not a legally valid rescission” until the DOJ puts in writing the fund is canceled.

“Even (Blanche’s) testimony was equivocal. … He refused to memorialize that rescission,” Sus said, adding it was “highly unusual.”

“This whole case is highly unusual, to say the least,” Leon responded.

Sus also argued Trump’s comments to reporters a day later praising the fund “directly contradicted” Blanche’s statement to Congress.

“I love it,” Trump said of the fund in his first public remarks after Blanche’s Capitol Hill testimony. “I think it’s so important.”

“These words carry immense significance,” Sus said Wednesday, noting the president oversees the DOJ and is plaintiff in the lawsuit against the IRS that resulted in the settlement fund.

Leon pressed back, saying that Trump’s comments do not mean the fund is going forward.

“He might be doing what he’s doing for political benefit to himself,” Leon said.

Termination in writing?

Andrew Block, senior counsel to the U.S. associate attorney general, criticized CREW for arguing that Blanche was “outright lying to Congress.”

“Why doesn’t he rescind the May 18 order?” Leon asked.

“I don’t know the reason for that,” Block responded.

Block panned CREW’s case as “simply not ripe for judicial review,” and dismissed the group’s argument that the fund evades transparency laws and is not structured to reveal information on awards or claimants.

“No money has been transferred and certainly no money has been sent out to claimants,” Block said.

Again, Leon asked: “So why not rescind it?”

“Your honor, I don’t know. All I know is what the acting attorney general said,” Block replied.

“Our briefs are our assurances in writing,” he added.

Upon his bench order denying CREW’s motion to immediately block the fund, Leon said he would soon issue his ruling on the group’s request for a preliminary injunction, which would block the fund during further litigation.

Leon warned Block that the DOJ should be forthcoming as the case proceeds.

“Don’t play possum with the court,” he said.

The DOJ did not immediately reply to a request for comment.

CREW President Donald K. Sherman said in a statement following Leon’s decision that “the court clearly committed to hold the DOJ and its attorneys to acting Attorney General Todd Blanche’s promise that the fund is not moving forward.”

“This is an important step. Although the court did not grant another temporary restraining order today, it made clear that if the government goes back on its commitment to shut down the fund that the court will hold it accountable,” Sherman said.

Fund jammed congressional work

The case before Leon is not the only legal challenge to the fund. A federal judge in the Eastern District of Virginia temporarily blocked the fund until Friday when the government and plaintiffs will appear in court. A former DOJ Jan. 6 prosecutor who was fired last year is among the plaintiffs.

The fund sparked multiple lawsuits and intense protest from Democrats and two police officers who deployed to the Capitol on Jan. 6, 2021.

The former officers, U.S. Capitol Police officer Harry Dunn and Washington Metropolitan Police officer Daniel Hodges, also sued.

The prospect that the fund could pay Jan. 6 defendants who assaulted police roiled Republicans as well. The GOP-led $70 billion immigration enforcement package was stalled in the Senate for over a week until Blanche’s testimony that the administration was “not moving forward” broke the logjam.

Ultimately, Senate Republicans did not adopt any restrictions to limit or ban the fund structure.

Trump’s announcement last week that Blanche, who was his personal attorney in 2023 and 2024, was his pick for attorney general has further fueled intense scrutiny from Democrats. Trump formally nominated Blanche, of Florida, Monday.

During a virtual press conference Wednesday opposing the nomination, Sen. Sheldon Whitehouse, D-R.I., said “Blanche’s dirty fingerprints (are) all over the cop beaters slush fund, which may actually have been intended as a payroll account for Trump’s November election interference for his thugs to go hit the polling places.”

He added the fund “landed with a huge thud among Republicans, and so he’s going to carry that stone as he tries to move through confirmation.”

The fund was part of a deal for Trump to voluntarily drop his $10 billion lawsuit against the IRS for the leak of his tax returns nearly seven years ago. As part of the settlement, Trump, his two sons and the Trump Organization will be immune from tax audits and other criminal prosecution going forward.

Treasury Secretary Scott Bessent was mum about the IRS immunity deal when pressed by bipartisan members of the Senate Finance Committee on June 3.

A federal judge in the Southern District of Florida reopened the case after 35 former federal judges intervened, arguing the Trump administration deceived the court by not sharing all details of the settlement. The judge will hear arguments Friday.

By Jennifer Shutt
National

WASHINGTON — The head of the Social Security Administration testified before Congress on Wednesday that customer service has drastically improved during the last year, though he declined to offer ways to address the program’s dire financial situation.

Commissioner Frank Bisignano instead deferred to lawmakers, who will need to make changes to the safety net program for tens of millions of Americans before it reaches insolvency in six years.

Bisignano’s testimony came just one day after the Social Security trustees said in their annual report the Old Age and Survivors Insurance trust fund will “become depleted” in the fourth quarter of 2032, earlier than previously expected. Once that happens, benefits will automatically drop by 22% and gradually decrease from there.

“I always thought my job was to make it perform as well as possible so you all have a set of options and choices to decide on how this great American program, which is, you know, fundamentally called by some the largest insurance program out there, others could call it the largest retirement program out there. Anyway, the idea is to make it perform well so you all can make the decisions,” Bisignano said.

Republicans on the House Ways and Means Committee’s subcommittee on Social Security and subcommittee on Work and Welfare, who held the two-hour hearing, were pleased with the statistics Bisignano shared about his administration of Social Security.

Democrats on the panels, however, were skeptical that he was giving a full picture of the delays that some Americans face when trying to apply for benefits or ask about an issue they’re having with the program.

Illinois Democratic Rep. Danny Davis, ranking member on the Work and Welfare subcommittee, said the Social Security Administration’s “statements about customer service do not always appear to reflect the reality Americans experience.”

“Press releases claiming dramatic improvements in SSA customer service, particularly on the 800-number, conflict with reports from AARP and our constituents,” Davis said. “People across the country report waiting in long lines at Social Security offices or being turned away and told to make appointments, only to discover no appointments are available.

“Similarly, it seems misleading to claim a zero call wait time for seniors that waited hours or days for a call back, or to praise short call wait times for people whose problems are not resolved.”

Debate over statistics

Bisignano testified that he ushered in “the best all-around performance ever at the Social Security Administration.”

“More than 99% of our field offices are open and serving the public, with average wait times reduced to 20 minutes, a 30% improvement. No field offices closed due to staffing,” he said. “We now answer 90% of calls to our 800-number and have reduced average wait time to five minutes, a 75% improvement.”

Bisignano added that “web transactions” have risen by 37% and that there has been a 21% rise in account creations.

California Democratic Rep. Judy Chu said she found the statistics Bisignano shared “extremely misleading,” in part, because the administration classifies anyone who requests a call back instead of waiting on hold as a zero minute hold time.

“The American people deserve accurate information on how long they can expect to wait when trying to get help for their benefits,” she said.

Chu then shared the story of a woman who tried to schedule an in-person appointment to apply for survivor benefits after her husband died in July but was unable to get one until October.

“Once she finally got an appointment, she then had to wait at least four months,” she said.

Nevada Democratic Rep. Steven Horsford pressed Bisignano about wait times at the Las Vegas field office for disability hearings, which he said take nearly a year.

“My office continues to hear from seniors, people with disabilities and working families who cannot get answers and cannot access benefits that they deserve,” Horsford said. “Last year, you promised improvements. Today, Las Vegas disability applicants are waiting nearly 11 months.”

Horsford then asked if Bisignano would “designate a senior SSA point person to work directly with me and my office on unresolved constituent cases.”

Bisignano said he would send the head of disability to come see Horsford in his office.

Social Security solvency

While the subcommittees and Bisignano barely scratched the surface of Social Security’s financial problems during the hearing, a separate event hosted by the Committee for a Responsible Federal Budget delved into those struggles.

Karen Glenn, chief actuary at the Social Security Administration, said during her presentation on the trustees report that addressing the program’s budget woes is “a simple math problem” but “a difficult political problem.”

“We can either raise scheduled revenue by about one-third, reduce scheduled benefits by about one-fourth or some combination of the two,” she said. “So it sounds simple, but not so easy in practice.”

Glenn said one of the purposes of the annual report to Congress is to “provide information to assess solvency and the changes needed to eliminate those shortfalls.”

“The trustees have consistently advised that Congress should act sooner rather than later,” she said. “We are just about out of time for that sooner. We are basically at the later.”

Mark Sarney, director of Social Security policy at CRFB, said he doesn’t believe Congress will be able to add to the annual deficit in order to avoid a drop-off in benefits since “we’ll probably have debt problems way before 2032.”

That leaves lawmakers in the House and Senate with complex choices to make during the next few years.

“Hopefully there will be a growing call within Congress to actually get serious and do something,” Sarney said. “Because if you let the cut happen, that’s like 1% of the national economy that suddenly doesn’t go out in checks, which may matter less in some parts of the country, but in others, where most of the population is depending on Social Security, that’s going to be a hammer blow to both people’s lives and the economy. And nobody wants that.”

By Sam Gauntt
National

WASHINGTON — Agriculture Secretary Brooke Rollins on Wednesday blamed the Biden administration’s “open-border policies” for the six confirmed cases of the New World screwworm that have reached the United States, repeating a theme among Republicans.

Speaking to members of the Senate Agriculture, Nutrition and Forestry Committee during an oversight hearing, Rollins said it was the previous administration as well as Mexican cartels’ “refusal to crack down” that allowed the New World screwworm fly to migrate north. The pests can be transported via infested livestock or pets.

“Everyone took their eye off the ball years ago, and unfortunately, because of the border policies, it’s coming our way,” Rollins said.

According to Rollins, there are now six confirmed cases of the New World screwworm in the U.S., with five in South Texas and one in New Mexico.

The New World screwworm is a devastating pest that can wreak havoc on cattle herds and other livestock. The screwworm is a type of fly that spreads by laying eggs in other animals, with the eggs then hatching into larvae that will eat the animal’s flesh, causing significant harm and even potential death, according to the Centers for Disease Control and Prevention.

The fly had been eradicated in the U.S. since 1966.

USDA staff reductions

Throughout the hearing, committee members and Rollins agreed on the importance of working to eradicate the screwworm in the U.S.

But some Democrats said recent Trump administration decisions could hinder the department’s ability to carry out that task.

Sen. Amy Klobuchar, D-Minn., voiced concerns about the impact of recent layoffs at the U.S. Department of Agriculture on the department’s ability to combat issues like the screwworm threat. She noted that the department’s Animal and Plant Health Inspection Service lost 25% of its staff, including more than 300 veterinary services employees.

“Clearly, we need a long-term response,” Klobuchar, the committee’s ranking member, said. “I continue to be concerned about some of the reorganization’s cuts to USDA. How that could affect our long-term response.”

Since President Donald Trump returned to office last year, the USDA has lost more than 21,000 employees, according to data from the Office of Personnel Management. It ranks among the largest decreases of any federal department or agency.

But Rollins reiterated that the staff dedicated to preventing the spread of the screwworm has actually increased. At the beginning of last year, she said, the USDA had 10 full-time staff members working on screwworm prevention, while it now has more than 120.

She said the department has allocated $1.3 billion to combat the screwworm.

“We’re prioritizing where the big threats are as we’re working to ensure that we’re meeting all of the needs across the country,” she said.

During the hearing, Sen. Roger Marshall, R-Kansas, also pointed the blame toward the Biden administration.

“We saw this coming under the previous administration, and they refused to respond,” he said. “When you let millions of people migrate through Central America this way, we saw the screwworm just come with them — whether it was on their pets or maybe they were bringing livestock.”

USDA slowed screwworm spread

The agency’s internal predictions, according to Rollins, were that the screwworm, which is still widespread throughout South and Central America, would have reached the U.S. by last summer. But she said the department was able to slow the devastating pest’s arrival by closing all ports across the Southern border to livestock trade last summer.

USDA is primarily combating the spread of the New World screwworm by breeding and releasing sterile screwworm flies, which will limit the number of flies that can reproduce and ultimately reduce the population.

She said the U.S. currently produces about 100 million sterilized flies a week, but needs to increase its production to 500 million a week to eradicate the fly.

But Rollins stressed that while the screwworm poses a threat to U.S. livestock, particularly cattle herds, it doesn’t risk tainting the food supply itself.

“The food supply is 100% safe,” she said. “This is not a disease. It’s not a virus. It’s a fly.”

By Shauneen Miranda
National

WASHINGTON — A bill to crack down on financial aid fraud passed the U.S. House on Wednesday.

The measure, which passed 249-172, would require the U.S. Department of Education to set up an identity fraud detection system for the Free Application for Federal Student Aid, better known as FAFSA.

Nearly 40 Democrats voted for the GOP-led bill.

The bill safeguards against fraudulent “ghost students,” which lawmakers say have cost taxpayers millions of dollars by applying for federal student aid and college under stolen identities and enrolling in classes, only to later disappear with such funds.

The measure would codify a FAFSA fraud detection tool already underway at the Education Department and comes as President Donald Trump’s administration pursues a sweeping anti-fraud effort across the federal government.

Rep. Burgess Owens, who sponsored the measure, said during floor debate Tuesday that his bill “builds on the good work already done by the Trump administration to protect taxpayer dollars and help safeguard the integrity of the student aid system by ensuring federal aid goes to real students.”

The Utah Republican added that his legislation “takes a straightforward approach, identifies suspicious student aid applications and ensures these applications are for who they say they are before dollars go out the door.”

A similar, bipartisan effort was introduced in the U.S. Senate earlier this year.

Education Secretary Linda McMahon said her department was “proud” to see the House pass the bill, which she said “will cement our ongoing efforts to eliminate fraud, waste, and abuse by requiring screening for suspicious federal student aid applications,” in a Wednesday statement.

“Since Day One, the Trump Administration has been committed to restoring existing fraud detection capabilities while building the most comprehensive fraud-detection system in the Department’s history,” she said.

Fraud detection system

Under the bill, the Education secretary would be required to use the identity fraud detection system to assess each FAFSA submitted on or after Oct. 1.

If a “reasonable suspicion of identity fraud” on the FAFSA is presented, the secretary must notify the applicant and the schools designated on the application that they are subject to “additional identity verification requirements” before they can receive federal financial aid.

The bill also requires both an annual audit of the system and a report to Congress on its effectiveness.

The measure loops in provisions from a separate bill from Pennsylvania GOP Rep. Glenn “GT” Thompson that also aims to combat student aid fraud.

That includes a requirement that the Education secretary prioritize program reviews of institutions that have “demonstrated a pattern” of providing federal financial aid to students whose FAFSA “presented a reasonable suspicion of identity fraud.”

‘Vague enforcement standards’

Rep. Bobby Scott, ranking member of the House Committee on Education and Workforce, voiced his opposition to the measure during floor debate Tuesday, saying the bill “could reasonably be viewed as part of a broader strategy to weaponize student aid.”

The Virginia Democrat noted that while preventing federal student aid fraud and protecting taxpayer dollars “is always a good idea,” the bill’s “creation of vague enforcement standards and punitive mandates without clear guidance” for schools and students could make it more difficult for legitimate students to access aid in order to attend college.

Scott also pointed to the Education Department’s April launch of an identity fraud detection system, saying Congress should allow the tool to operate and wait for the agency to evaluate the results.

“Codifying this new system without assessing its effectiveness just doesn’t make any sense,” he said.

By Shauneen Miranda
National

WASHINGTON — A bipartisan pair of U.S. senators promoted their legislation Wednesday to set national standards for college athletes’ compensation, calling the compromise bill the best available option.

GOP Sen. Ted Cruz of Texas and Democratic Sen. Maria Cantwell of Washington state — the top members of the Senate committee with jurisdiction over the matter — convened a roundtable of coaches, leaders and college athletes over their bill introduced this month to “restore order in college athletics.”

The sweeping bill is meant to combat many of the biggest challenges in college sports, but faces a long road to becoming law amid opposition from key figures, including major sports conferences.

Cruz noted the opposition, but urged support for the bipartisan compromise.

“My view is this is the only train leaving the station, which is, this bill, I believe, has a real prospect of passage — it is bipartisan,” said Cruz, acknowledging that at least 60 senators are needed to advance a bill past the filibuster.

Republicans hold just 53 seats.

“In my view, anyone who’s a critic, anyone who is attacking this bill, has the burden of saying, ‘What’s the alternative?’” he added.

Cantwell said that while she and Cruz disagree on several things, even on issues within the committee’s jurisdiction, “we agree on this issue of setting some rules.”

The Washington state Democrat said she and Cruz were “kind of disappointed that this universe of institutions and organizations couldn’t get there, but we’re an example of people who don’t agree but can agree.”

New reality in college sports

The bill marks the latest congressional push to overhaul the college sports world, which continues to grapple with the fallout from the NCAA’s 2021 guidelines that allowed student-athletes to profit from their name, image and likeness, or NIL.

Colleges, businesses and marketers are also wrestling with a patchwork of state NIL laws, gender inequity in NIL deals and the NCAA’s controversial transfer portal, among other issues.

Among several major changes, the Senate bill would create a national NIL standard that preempts the patchwork of state laws, provides certain antitrust protections to the NCAA and college sports conferences and establishes a five-year eligibility timeline for athletes.

GOP Sen. Eric Schmitt of Missouri and Democratic Sen. Chris Coons of Delaware co-sponsored the bill.

Sherika Montgomery, commissioner of the Big South Conference, said “the things that are enclosed (in the bill) will provide a level of stability as well as sustainability, while also providing an opportunity and a pathway for success that I know our current 4,300 student-athletes really value.”

The conference includes nine member institutions across North Carolina, South Carolina and Virginia and is affiliated with NCAA’s Division I.

Montgomery pointed to a patchwork of state laws just in those three states that have prompted a “level of instability,” noting that “as our coaches recruit not only against themselves in our conference, but across other coaches in those respective states, there has been a widening of the gap with the current rules that we have.”

Under the bill, athletes would also be guaranteed one transfer without losing eligibility.

Gannon Flynn, a swimmer at Boston University, said the bill “does a good job of regulating the transfer industry,” adding that “as you see more and more athletes do one year, two years (at a school), transfer four, five, six times, it’s impossible to get those degrees.”

When asked by Cruz what would be the consequences of Congress doing nothing, Flynn said “we will continue to see rules that the NCAA still has, one by one, start to get knocked down by the courts every time someone does something against the rule, and then goes to the judge of their choice to rule in their favor, and then we have each state regulating to how it helps them.”

He added: “If we continue down this route, we’re not going to have rules, there’s going to be no integrity left in the game, and without clear, enforceable and fair rules, then there’s no point in us even competing.”

Mounting opposition

Though members of Wednesday’s roundtable pointed to the “stability” the bill could bring to college athletics, the measure already faces pushback from powerful athletic organizations such as the Big Ten and Southeastern conferences, which have said they do not support the bill as drafted and that the legislation “leaves critical issues unresolved.”

Cruz and Cantwell later met with the presidents and chancellors of schools in both conferences.

The Congressional Black Caucus also sent a letter this month to Cruz and Cantwell urging the Senate Commerce, Science and Transportation Committee to pause consideration of the bill and related college sports legislation “until athletic leaders meaningfully engage with concerns about attacks on Black political representation.”

The major voting bloc rallied behind the NAACP’s call to push back against GOP-led redistricting efforts in Southern states via college sports, including a boycott of public universities by athletes and supporters.

A competing bill to address college athletes’ compensation remains stalled in the House after being yanked from the voting schedule in May following unanimous opposition from the caucus.