Bloomberg TechnologyBloomberg's Ed Ludlow looks at OpenAI mulling a restructuring and discussing giving Sam Altman a 7% equity stake in the company. Plus, Micron shares see their biggest one-day gain since 2011 on the back of earnings, a look at Meta's augmented reality strategy, and NYC Mayor Adams gets indicted.
We're from Marhart where Innovation, Money and power Collie in Silicon Vallet NBN. This is Bloomberg Technology with Caroline Hyde and Ed Lodlove.
Live from San Francisco. This is Bloomberg Technology. Open AI mols are restructuring and giving Sam Altman a seven percent equity stake in the company. Micron shares see their biggest one day gain since twenty eleven on the back of earnings.
And we look at Meta's.
Augmented reality strategy with an exclusive interview with the company's CTO. And this is what financial markets look like in the context of technology after a really bright start and as that one hundred is now completely flat.
There had been.
Enthusiasm for technology shares because of strong economic data, so the idea that central banks around the world will start cutting rates and also a kind of reinforced pledge from China for a stimulus package. It's in the semiconductor space where there's all the action. You look at Micron. This is an earning story where it's forecast for the current period is about strength in AI. We are talking high bandwidth memory and that strength in Micron, which we will discuss in more detail soon, is boosting the Philadelphia Semiconductor Index or the socks.
Let's get to our top story.
Open Ai is discussing giving CEO Sam Autman a seven percent equity stake in the company and restructuring to become a.
For profit business. This all according to sources.
This is a major shift that would mark the first time Altman is granted ownership in the AI startup, and there is a lot more going on behind the scenes. Bloom most Rachel Metz joins me. Now, you and I reported on this together with Sharen Gafari.
And Dina Bass.
Let's start with this idea of open ai adjusting its business model.
What of sources told us.
They've told us that the company is considering shifting from this nonprofit status that it's had for a number of years. It has right now and non it is a nonprofit, but it also has a very complicated organizational structure, and that it may shift its main business to being a for profit public benefit core. And also that they are considering whether Sam Altman might have a significant stake in it, as you mentioned, seven percent, which could translate to a huge financial windfall for him, right, Rachel.
Unsurprisingly, like loads of people have asked me I'm sure they've asked you our audience on Bloomberg Technology, like do the math. How much does that mean in terms of wealth? For Sam Altman, I think it's too early to do the math, right. We'll get to it when the round is closing those things. Now, this is news. Sam Altman has actually been speaking today into in Italy at Tech Week Italy, and this is what he said. He was basically asked if Mira Murrati, who is the chief techn knowledgy officer who announce her resignation twenty four hours ago, is leaving because of this restructuring initiative. He said, no, I think this is just about people being ready for new chapters of their lives and.
A new generation of leadership.
Again, you and I have spoken to sources who have been telling us about what's going on.
My understanding is that.
Marati is still technically there negotiating an exit, and staff are a little bit worried.
Yeah, I mean, I think there's a couple of things happening. One is that the company has seen a huge amount of organizational leadership shifting since Sam was briefly ousted and then came back a CEO late last year. So a lot of things have happened in a fairly short period of time, especially at the top.
They have a whole new board.
Basically, they have a lot of changes at the sea level at the company. People go in, people coming, and also founders have left. At this point, there's two founders still there, Sam Martman being one of them, and a third, Greg Brockman, is on leave at least until.
The end of the year.
So employees are seeing a lot of changes. But one thing that we do know about Murati's exit that CM actually said publicly yesterday was that she it sounded like it was a surprise to him. He said in a post on AX yesterday that Mirror told him she was leaving. He said this morning. This was yesterday, the day that this happened, So it sounds like it might have been a surprise to everyone, including him.
Okay, Bloomberg's Rachel Metz we continue to report on that story.
Check out the full report.
On Bloomberg News and Bloomberg Technology. We have some breaking news at the top of this hour. Super micro Computer is being probed by the Justice Department following a critical report by an activist short selling firm. This is all according to a report in the Wall Street Journal, whose cite anonymous sources. Bloomberg's Ian King is here with us in San Francisco. The stock now down fourteen percent. It had been halted. We're reacting to the journal report, But what do we know from their reporting?
Yeah, I mean what they're saying again, it's back to this issue that the company has kind of admitted that they've sort of been late to file their annual report because of counting exactly accounting issues, and that's what is supposedly, according to the journals reporting, at the heart of this investigation, and that goes back to something that they've also been through previously a few years ago, where they had accounting issues.
I've written to super Micro. They've not yet responded, but of course, between us, we will try and get the story. The big story today in markets and in semiconductors, Bloomberg's Ian King is Micron. This is a really big move, and it's a move based on the market's understanding that Micron is a winner in the data center build out that's happening. Just explain what Micron told us.
Yeah, I mean, they confirmed everybody's best hopes and said, look, hey, the market for this type of memory that goes into these AI servers going to be twenty five billion next year. That's a great opportunity for us. We're going to do well in there. But the flips that and you'll remember we spoke about this yesterday was people were worried about what's going on in smartphones, people worried about what's going on in PC's, and Micron said, hey, no, we think it's going to be better than we had previously thought. Don't worry about it. So there's a kind of a double lift there.
This has been a fast start to the show, a lot of breaking news. Let's take a pause and go back to basics. If I walked into a data center and I went up to a server rack, and I pulled out one of the trays i'd probably find right now at the center of it in Nvidia GPU. But what I'm trying to help our audience understand is that around the outside there would be half a dozen high bandwidth memory chips. And right now it seems like those high bandwidth memory chips are coming from Micron.
Yeah, I mean, obviously you're very focused on this topic. Saying I'm a nerd, I will you said it now the absolutely big models, big data.
Right.
If the better they get, better that you give them more data. How do you get data fast? You put it in memory that's adjacent to those microprocesses. The more memory, the higher speed that memory we can talk to them, the better they get. Obviously, if you are the company that is leading the way in getting that memory development out there and getting that memory to these companies, you're doing well.
Bloombergs and King across the breaking news on super micro and on Micron, there's actually a lot more happening in financial markets. This impacting the technology sector. I want to go out to New York and Bloomberg's Isabelle Lee, and it was really interesting at the open. I was oky at the NASDAK one hundred and like really big gain economic data, digesting the path forward for central banks. And then we kind of had a whimper with semiconductors still strong.
What's the story behind that?
Isabelle Wimber is definitely the right word, because, for instance, you see Micron at popped twenty percent, that's the largest one day against since twenty eleven. But now it's down or it's up still thirteen percent, but it's paired back some of those games, even the NASDAC and even the SMP, but it's still the name of the game. It's still tech because for instance, we have Nvidia, Taiwan Semiconductor and AMD all testing. There are two hundred day moving averages. So this is a bullish sentiment signal. Have the semiconductor ETF of VANK that's is twenty three billion semi coonductor ETF. It's hitting its highs in August and we're on track for its third straight week of inflows, meaning investors are piling money into that. So text still remains to be the big scene throughout these whole market rally, but it is losing some of its lester because we have the equal weighted SMP five hundred catching up. Month to day it's up around one point four and sm P five hundred and nastak is up around two percent, so you see some of those gains there. Even in video it's up around Isabelle and this month. But you're today that's one.
Fifty Pelle New York man Eric Adams is speaking.
You can shut you want with us, and it.
Is first of all, I wanna thank you for being here this morning, and I wanna thank uh the supporters of all ethnic groups that I hear, particularly the men and women of the clergy that's here that have joined me here today.
And we are not surprised. We expected this.
This is not surprising to us at all, the actions that have unfolded over the last ten months. Yeah, it's the big leaks, the commentary, the demonize it. This did not surprise us that we reached this day. And I asked New Yorkers to wait to hear our defense before making any judgments. In about thirty minutes, you're going to hear his story of the case that In about thirty minutes, you're going to hear his story of the case that is in front of us. The story would come from the federal prosecutors, and I ask to wait and hear our side to this narrative. From here, my attorneys will take care of the case, so I can't take care of the city. My day to day will not change. I will continue to do the job for eight point three million New Yorkers that I was elected to do, and the three one hundred thousand plus employees of our city government will continue to do their jobs because this is what we do as New Yorkers. It's an insult to the hardrooking, pity people of the city that anyone would say that they won't do their jobs while this case proceeds in the background. They are dedicated public servant and I have been one of them for many years, and they're going to continue to do their job moving the city forward every day. All right, man, it's an unfortunate day, and it's a painful day. But inside of all of that, it's today where we will finally reveal why for ten months I have gone through this and I look forward to defending myself and defending the people of this city, as I've done throughout my entire professional career. I want to now turn it over to the person who started me on this journey, Covid Daughtry.
Thank you, mister Mayor.
You are Mayor.
There was New York City Mayor Eric Adams speaking after being indicted on bribery and fraud charges. What he had to say that while the legal process and the cases ongoing, his day to day will not change. He talked about how in the spirit of being in New Yorker, the function of government, the function of administration of the city will continue.
He will serve as mayor of.
New York City, but also stated that he looks forward to defending himself against the charges being brought against him, the allegations of the indictment that are being brought against him.
He is speaking at an event.
Let's Get Out Now, to Bloomberg's David Gurra, who is out in New York and has been following not just the legal action but the response of the mayor.
David, Yeah, I was struck by the tone from the mayor there, kind of mirroring what we heard from him last night when he released a short video statement from Gracie Mansion where he lives here in New York City, kind of decrying those charges first and foremost, but also vowing to fight them and really emphasizing it the fact that he thinks he's going to be able to do this, fight these charges as he continues as mayor of this city. There are a lot of skeptics, as he acknowledged in that statement and what we just heard from the Mayor this morning, who think that he isn't able to do that, shouldn't be able to do that.
He's adamant that.
Interestingly, he says he's been he's been fighting allegations like this or the spectru of these allegations for many months. He should be able to keep doing it going forward.
Mayor Adams has resumed speaking, let's go back to.
It good money.
My name is Hazel Dukes.
I live in Harlem.
David.
An issue of timing there for which I apologize, So you are saying please continue.
Yeah.
So I think that what we're going to be having to focus on here in the hours to come is what the response is from the Democratic Party to what the mayor is saying. So we have heard from some officials he is going to be in a primary in the next few months if he runs for office once again against the current comptroller and the previous Commontroller.
Both of them have called upon him to resign.
So there is a small and growing chorus of Democratic officials here in New York who are saying he shouldn't continue to do the job. We haven't heard from mckeim, Jefferies, the ranking member in the House of Brooklyn Night, like the mayor himself, somebody he's known for a very long time. If we start to see erosion and support from some of these kind of longtime.
Officials in the Democratic Party.
Yes, in New York, but more broadly, I think that's going to be pretty significant. And then it's a quirk of New York City and the way that this city is governed, in the state is governed that the governor of this state, Kathy Hopel, does have the power to suspend the mayor and remove the mayor. Now, nobody's having a serious conversation about that right now. However, we'll see sort of as this unfolds, if it's something that gets talked about more man certainly, this is something that the governor of the state could be able to do if she's so wanted.
Bloomberg's David Gura in New York tracking the story, and we will continue to track the situations. We will be right back. This is Bloomberg Technology.
If you're just joining us.
New York Mayor Eric Adams has been speaking after being indicted on bribery and fraud charges. What he said is that he will defend himself against those charges, that in the meantime, while the case is ongoing, he will continue to perform the duties of mayor, and that the work of mayor will continue. A note of interest for our audience he has hired Alex Spiro, an attorney that audience members of Bloomberg Technology will recognize as somebody who has defended Elon Musk in the past. We will continue to track the latest from New York as Mayor Adam speaks, and we expect more news from the authorities in the coming hour. But Mayor Adams saying he will defend himself against those indictment charges. Okay, let's go back to technology news. Ireland is going to use almost the almost sixteen billion dollars Apple was made to pay to it in taxes for infrastructure projects. That's according to the nation's Prime minister. The sum of money is now settled after a recent ruling by EU courts enforcing a twenty sixteen decision that Ireland's tax policy for Apple gave it an unfair advantage. Irish Prime Minister Simon Harris outlined the plan for the cash in an interview with Bloomberg's Maniscranny in New York this week.
I do think it's appropriate in our budget that we would provide clarity as to the principles we will apply as to how to invest it and let me let me assist in suggesting that I think those key areas are own water, our water infrastructure, our energy grid and housing supply. There are three areas that I think could could I suppose really give it a benefits to their countries at economic security into the future.
Ireland relies heavily on foreign direct investment from the US, and a big chunk of that comes from big technology companies. This week, the country's Minister for Enterprise, Trade and Employment, Peter Burke, is meeting with the tech industry and investors on a trade mission here to Silicon Valley in the Bay Area. Who joins us here in San Francisco, Good morning and welcome to Bloomberg Technology Minister Marnie.
Ed Great to be here.
What's your colleague and nation's leader said about the Apple tax money is it will be used on water, energy and housing infrastructure.
But the relationship with.
Apple is so key in your meetings here with different technology companies. What have the repercussions of that ruling been. Has it impacted your ability to negotiate other deals and have an ongoing relationship with those companies interested in Ireland.
Well, first of all, I'd say is that we don't negotiate. Deans have a very independent Revenue Commissioner. It hasn't been referenced at all. I think really people see it as a legacy issue. If we look back over time, these are two decisions taken back in the late nineties early two thousands in terms of advanced opinions that were issued, and if you look at the prism of our modern tax legislation, which has changed very significantly over the last number of years. We have been a world leader in the BETS and OECD process, obviously having that global taxation agreement worldwide and we're seeing the moves of Pillar one and Pillar two. Europe has been a very earlier adopter on that process. So it's really looked at the prism of all legacy issues and hasn't been raised at all because we're very much to the forefront as a country of transparency. We have one of the highest levels of exchange agreements throughout the EU. We have a number of international tax agreements as well, which is very much to the forefront worldwide. So we're a country that can stand shoulder to shoulder in terms of transparency and also very clearly that we have been a leader in going to the new global taxation of OCD process.
Mister Beck and meet this week.
I'm sure the election in November, the presidential election has come up in either outcome. Do you see any tangible impact to the trade and tariff situation as it would impact Ireland.
Don't.
We've worked with many US presidents over the years and we've had a very long standing close relationship. Obviously, ten percent of Americans have Irish heritage.
We have nine diplomatic.
Missions here in the US, which we've increased our footprints significantly over the last number of years, and we'll continue to do that because we have very strong cultural ties with the United States and obviously share so much heritage, and that will continue. Our diplomatic presidence is very strong. We're very privileged to have a stand alone engagement every single year in Saint Patrick's Day in the White House in Washington, and that's also very important.
That will continue.
And this year we're celebrating one hundred years of diplomatic relations and our t shock will be heading over to the White House to meet President Biden on that okase and to celebrate, absolutely, to celebrate what's wonderful we've being Irish and American and the great history we've had over the last number of decades.
It's a big focus for this program. Bling Bow Technology for quite a while now has been data centers, and I understand it's been a focus for you as well. There's somewhat of a moratorium on data centers, particularly in Dublin itself. How is that impacting your ability to attract investment bring new data into infrastructure to the country, because that is the process that's happening around the world right now.
So maybe if I just set out the background the first Well, there is a moratorium in our country with a very clear policy at the moment. We obviously have constraints, but going out to twenty thirty, like any country, we have a unique advantage now in terms of our energy capacity. We have a number of offshore regeneration projects that are under where were four contracts signed on the East Course that's going to have a capacity of about twenty gigawatts up to twenty forty. A lot of that would be delivered by twenty thirty. And the sense what we're doing now is we're setting out a roadmap to get to that point. So our independent regulator, the cru is currently going to report in the next number of weeks, which will have a very strong policy on large energy users and will point the direction towards giving them a roadmap of when they will be able to connect to the grid.
So we're very much open for a business. We do know the value that.
Data centers provide because with very agile economy, a very high tech economy, eight out of the top ten global leaders call Ireland their home. Obviously, about one hundred and seventy five thousand people employed in that sector, one hundred and eighty billions of exports, so huge, huge amount of value to Dirish economy. And obviously we know that data centers are very much key and integral to that process, and that's why we're going to have a sustainable policy to ensure that those who invest here there are no surprises, they know what they will get and we will continue to underwrite their development into the future.
Minister, is there any specific plan to use the Apple tax money that is apportion to energy specifically for a center support in the context of energy.
We're looking at a number of ways to really deploy that funding. Obviously, firstly, I would say as an economy, we've gone from about three and a half billion capital investments since twenty seventeen up to fourteen and a half billion euro now, so you have to look at the capacity of the economy to deliver infrastructure. So we have to be careful in that regard and we'll be looking at a number of areas.
Firstly, obviously in terms.
Of our grid and our energy infrastructure, which is very important. We want to keep competitive. We're the most competitive country in the Eurozone. We're number four in the Independent Competitive Yearbook out of sixty seven countries measured. But we're going to put a good bit into our grid and secondly our water and wastewater, which is very important to us, and keeping up our skills based because as a country, we're very clear that our talent is our most prized resource, our people and we have the most highly skilled.
Youngest workforce in the EU.
We have double the graduates of eight percent and ict double the EU average. And also pain down our debt and you know, looking at sovereign wealth funds.
We have two particular funds.
That we will invest significantly into which will underwright Ireland's future to grow, which is very important to us.
Minister, we started this conversation saying you're on a trade mission so let's end it by asking how that's gone. Have you been able to attract any new investment this week?
It's been very exciting.
I've met so many companies, particularly in the Bay Area here who are at the very cutting edge of technology. We have a new implementation document with the Bay Area Council with John Randall Randolph and his team, we've put together, you know, tertiary partnerships with their higher education with Stanford and Trinity College and UCC in Cork. A lot of good work is being carried out to grow that relationship with about one hundred and sixty companies employing twenty five thousand people in operation where the seven largest investor Ireland are here, so it's very much a mutual by latter relationship as well as those who are employing so many people back home in Ireland. So I've met very exciting companies, really look forward to attracting new investment, but also critically Ireland investing more in this area as well because Enterprise Ireland one of our key state agencies, along with the ideas investing heavily in this sector through so many exciting companies with an Irish background.
Ireland's Enterprise and Trade Minister Peter Burg, thank you very much. We will be right back. This is Bloomberg Technology. Welcome back to Bloomberg Technology, Ed Lovelow here in San Francisco. If you're seeing it for the first time. Financial markets have kind of changed direction in the last thirty minutes. We saw really significant early gains after the market open, particularly in tech. Then as that one hundred is now up modestly three ten to one percent. But where there is continued strength is in semiconductors. The socks, yes, but the main story there is Micron, a memory chip maker, and for all the data center investment that's happening, what we're now learning is that for the memory chip makers it's happening too. Yes, you're getting GPUs and money spent on Nvidia, but now Micron is seeing a benefit and that was reflected in the forecast for the current period where they're seeing sales I think eight point seven billion dollars. The street was looking for around eight point three. We'll continue to track it because that is a big move in Micron, at one stage in the session on track for its biggest jump since twenty eleven.
And in the.
Background, there's a lot more to talk about in the context of AI.
Let's discuss it.
Where I Ooko Yoshioka, portfolio manager at Wealth Enhancement Group, also a holder of shares of Meta, and I thought that's probably where we would start.
Let's do that.
Meta's now down modestly six tens of a percent, And while I was there at Menlo Park yesterday, there was a notable move higher the moment that Oryan was unveiled. Why did investors react that way?
Sure?
Hi ed good to see you, so, you know, orian was pretty interesting to see. You know, we're getting sort of closer and closer to the minority report moment. I think in real life, at least, that's what it seemed like. Just with the combination of the glasses as well as the wristband that can control or or sense a lot of the movements in terms of how you interact with the it was a really interesting time to see Meta and just their overall investments into AI and AR and just all the synergies you're seeing across the landscape.
You and I have discussed the market so often, and we've often reflected that like one session is just not worth dwelling on often, but it is an interesting moment. Right now, Micron continues to push higher. There's evidence that it's broad. It's not just GPUs but high bandwidth memory as well. There's evidence in the forecast in sales. What does that tell you? You lead research at wealth enhancement groups, So how are you adjusting your model?
Sure?
So, you know, I.
Think with the memory side of things, you know, they were going through an inventory cycle. You know, the nand side of things has been a lot softer over the last two years, and so now you're starting to see a little bit of a recovery on the nand side. And then you are seeing this growth vehicle with bandwidth memory. And so not only are you seeing it impact Micron, but you know, Land Research is a maker of a lot of the equipment that is for high bandwidth memory, and so you're seeing that potential growth in twenty twenty five and that can continue beyond twenty twenty five as well.
The market's kind of got that trifecta this morning, economic data, central bank noise, and then earnings. Right now, for the technology investor, how do you apportion your focus to each of those?
Sure? So, I think with technology we have to take a very long term view I mean, at least that's what we do here at Wealth Enhancement Group. Tech is going to be a part of every investor's sort of portfolio, but you balance it out with some of the more cyclical areas of the market in which we can see strength in the overall economy and those areas that are also sensitive to the direction of interest rates, which the FED does you know, control a lot of that. So you know, a very diversified portfolio is something that.
We do advocate for.
But you know, I think technology plays a big lead in that.
Right now, what is the direction of travel for technology for the rest of this year. I'm asking you to give me your crystal bull prediction because.
My crystal ball is always so clear, So you know, in terms of you know, for for the rest of the year, I think things can be choppy. But I think what you want to always lean into is, you know, what is going to help you sleep at night and what are the quality companies that allow for your portfolio to continue to grow, whether it's in technology or not. And I think that's where, you know, we want to make sure that regardless of what the macro environment gives us, we're you know, invested in companies that have high quality and strong growth prospects in the future.
Right now, all our focuses on US names and the activities here, But do you ever look further afield iocode to Europe to Asia.
Absolutely. I think having a diverse portfolio across the globe is something that we again advocate for, simply because you never know when things turn around. And you know, one of the major drivers is the direction of the US dollar, and we think that the US dollar can weaken a little bit here just given the direction of interest rates, and international and emerging market stocks can benefit, and again you know their valuations are very attractive relative to US markets.
We expect to hear from the prosecutors in the indictment of New York Mary Adams very soon.
We may have to move to that. But before we lose you, I want to ask you.
Something that that other investors are now asking themselves. How important is it for you to get hands on with technology? If you think about what Meta showed us yesterday and I did with a Ryan with ray band Meta, but also using Meta aion device, is that something that informs your investment thesis by actually using the tech.
I think both using it and seeing others use it and engage with it, because it's not just myself, but you know people across all age groups and demographics. I want to see exactly how people are engaging with the technology, and younger people are much more adapt to adopting some of the technology. But then you also want to see how can you know older people adapt to it as well and integrated into their lives, because that is going to provide a larger sort of market and better growth over.
The long term. I think back to when you and I were discussing in videos earnings, and we remember the Capex story, but I think we've moved on.
Ak Eshoko, thank you.
Let's head out to a press conference where the prosecutors in the indictment of New York Merrick Adams are speaking.
Peracy charges against Eric Adams, the mayor of New York City. As the indictment alleges Mayor Adams engage in a long running consprent year see in which he solicited and knowingly accepted illegal campaign contributions from foreign donors and corporations. As we allege, Mayor Adams took these contributions even though he knew they were illegal and even though he knew these contributions were attempts by a Turkish government official and Turkish businessmen.
To buy influence with him. We also alleged that the mayor sought and accepted well.
Over one hundred thousand dollars in luxury travel benefits from some of the same foreign actors who arranged many of the illegal campaign contributions. These benefits included free international business class flights and opulent hotel.
Rooms in foreign cities. The mayor had a duty to disclose these.
Gifts on his annual public disclosure forms so that the public could see who was giving him what, but as we allege, year after year after year, he kept the public in the dark. He told the public he received no gifts, even though he was secretly being showered with them. We alleged that Adams accepted these benefits knowing that they were given to him because of his position, and in exchange for some of those improper benefits, he intervened in the New York City Fire Department's inspection process for a building owned and operated by the Turkish government, allowing it to open even though it had.
Not passed the fire inspection.
The corruption allegend the indictment is as I said, long running. As we allegend, the indictment Adams's solicitation of illegal campaign contributions began in twenty eighteen. After he started raising funds for his twenty twenty one mayoral campaign. He agreed to take contributions offered by multiple Turkish businessmen, several of whom he met in Turkey. Adams knew that these wealthy individuals could not legally donate in the US election. Federal law clearly prohibits foreign donations. That's how we protect our elections from foreign influenceet Adams directed his staff to pursue this illegal money to support his campaign from mayor, and as we allege, Adams continued to pursue foreign money in secret well into twenty twenty one, and it didn't stop with his first campaign from mayor. As we allege, in twenty twenty three, the mayor rekindled these corrupt relationships, seeking more illegal campaign contributions from some of the same foreign sources to support his reelection campaign. Adams also took contributions that broke other laws. As we allege, he sought contributions from businessmen.
Far in excess of what the law allowed.
He also allegedly sought contributions from corporations, which are not allowed to contribute at all in New York City elections. Many of those illegal corporate contributions were organized by the same people who organized the illegal foreign contributions, and Adams allegedly disguised them all in the same way by accepting the money through so called straw downers. A straw downer contribute someone else's money, hiding the money's illegal source, such as a foreign businessman, a corporation, or a wealthy New Yorker who has already contributed the maximum amount allowed, And as we allege, Adams circumvented all of these laws, taking contributions from exactly the sources the law prohibits, all.
To benefit his mayoral campaigns.
Now, Adam's also personally benefited from the illegal conduct.
A legend of the indictment, Adams solicited.
And accepted over one hundred thousand dollars in luxury travel benefits four years from wealthy Turkish business people and at least one Turkish government official seeking to gain influence over him. Adams started accepting undisclosed luxury travel benefits at least as early as twenty sixteen. He took these benefits nearly every year through.
Twenty twenty one.
Here are some of the benefits that we uncovered during our investigation. In twenty sixteen, Adams flew to India through Turkey and received two free round trip upgrades for business class seats that's the highest class on Turkey's national airline. Those upgrades were worth more than twelve thousand dollars and none of it was publicly disclosed. In twenty seventeen, Adams accepted free business class tickets for himself and his travel companions to France, Turkey and China, and he was put up in the Bentley Suite in the Saint Regis Hotel in Istanbul. All of that was worth more than forty one thousand dollars and none of.
It was publicly disclosed.
Also in twenty seventeen, he flew to China again through Turkey and accepted two free business class tickets for himself.
And a companion.
Those were worth more than sixteen thousand dollars and none of it was publicly disclosed. In twenty eighteen, he flew to Hungary through Turkey and accepted free upgrades for business class seats. Those were worth more than twelve thousand dollars, and none of it was publicly disclosed.
In twenty nineteen, he flew to Turkey and accepted.
A free upgrade to business class for his companion in a free stay in a lavish suite at the Saint Regis Hotel in Istanbul that was worth more than nine thousand dollars, and again none of it was publicly disclosed. In twenty twenty one, Adams solicited business class tickets to Istanbul, stays at luxury hotels and resorts, yacht tours, and meals. As we allege, he asked to pay a nominal fee for all of this in order to disguise what we allege were in fact bribes. He canceled that trip at the very last minute, but the benefits that he solicited were worth more than twenty one thousand dollars. And later in twenty twenty one, Adams flew Taghana again through Turkey and accepted free business class ticket upgrades and other.
Gifts while he was on a layover in Istanbul.
Those benefits were worth more than twelve thousand dollars, and just like all the other benefits I've just run through.
None of it was publicly disclosed.
Now, I want to be clear, these upgrades and freebies were not part of some frequent flyer or loyalty program available to the general public.
As we allege.
This was a multi year scheme to buy favor with a single New York City politician on the rise, Eric Adams.
Now, this is a.
Chart with all of the undisclosed travel benefits that we uncovered during the investigation.
We just listed all out here.
You see the year twenty sixteen, twenty seventeen, twenty seventeen, twenty eighteen, twenty nineteen.
And twenty the destination.
India all the way to Ghana, the benefits, the free upgrades or free tickets altogether, the hotel stays.
And the value.
And if you just sum up all the dollar amounts here, you get to more than one hundred thousand dollars. And of course, as I said before, every single trip that we list here was undisclosed, as we allegend the indictment. In addition to not disclosing these benefits, Adams sometimes created fake paper trails to try to cover up the travel benefits he solicited and received.
Let me give you one example.
Adams wrote emails to his staff, suggesting he paid for his twenty seventeen business class flights on the Turkish Airline, when, as we allege, he did not.
Those flights were worth a lot of money.
Just one ticket alone costs more than ten thousand dollars, But months after taking the flights, Adams wrote an email to a staff member and told the staff member that he had left cash in her desk drawer and that she should send the money to the Turkish Airline to pay for a trip he had already taken.
As the Indictmam makes clear, that's just a clumsy cover up. Now, just because.
Adams received benefits for free, that doesn't mean that there weren't strings attached. As we allege, a particular Turkish government official behind many of the benefits Adams sought and accepted, gave Adams all these things to gain influence over him.
We alleged that.
Adams knew that and took the benefits anyway. We alleged that when the Turkish government official needed him, Adams also took corrupt official action in exchange for some of the luxury travel benefits. In twenty twenty one, the Turkish government official was trying to open a brand new high rise building in Manhattan that would house Turkey's consulate.
There was significant time.
Pressure because the Turkish official desperately needed the building to be open in time for a visit from Turkey's president. This building was important to the Turkish official, and it was important to Turkey, but the fd and y's fire safety professionals wouldn't let the building open because the building hadn't passed an inspection, and not just that, some of the people of fd and Y thought the building had so many issues and defects that the building was not safe to occupy. So the Turkish official sent word to Adams that it was quote his turn unquote to support Turkey, and as we allege, Adams delivered and pressure the fire department to let the building open. The NY professionals were convinced that they would lose their jobs if they didn't back.
Down, and so they did. They got out of the way and let the building open. The Turkish official got what.
He wanted, and, as we explained in the indictment, just four days after Adams held up his end of the bargain, he went right back to soliciting more travel benefits from the Turkish airline. Now, I want to make three things crystal clear. First, the conduct alleged in the indictment, the foreign money, the corporate money, the bribery, the years of concealment is a grave breach of the public's trust.
Public office is a privilege.
We alleged that Mayor Adams abused that privilege and broke the law, laws that are designed to ensure that officials like him serve the people, not the highest bidder, not a foreign bidder, and certainly not a foreign power. These are bright red lines, and we allege that the Mayor crossed.
Them again and again for years.
That is the only reason we are here today. Second, this investigation continues. We continue to dig and we will hold more people accountable, and I encourage anyone with information to come forward and to do so before it is too late.
And Third, the Southern District.
Of New York remains committed to rooting out corruption without fear or favor, and without regard to partisan politics. We are not focused on the right or the left. We are focused only on right and wrong. That is our duty and we will fulfill it.
Now.
Today's charges are the product of a tremendous partnership. I want to thank our partners at FBI and the New York City Department of Investigation who have been with us every step of the way. And finally, I want to commend the outstanding career prosecutors from SDN Y who are handling this case, Celia Cohen, Andrew Roorbach, Hagen Scotten, and Derek Wickstrom, and the chiefs of the pub Corruption Unit Laura Pomerantz and Robert Sobelman. It's now my pleasure to turn the podium over to FBI Assistant Director in charge James Denying.
Good morning, and thank you for being here today. The indictment of a sitting mayor is not just another headline.
It is a.
Stinging reminder that no one is above the law or beyond reproach, and it serves as a sobering moment for all of us who place our trust in elected officials. Today's indictment sends a powerful message to every elected official in this country. Public service is a profound responsibility and should be a noble calling. When that's perverted by greed and dishonesty, it robs us of our trust. It's a pact between leaders and their communities built on the pillars of trust, accountability, and transparency. When that pact is broken, the consequences ripple far beyond one office or one election cycle.
We know not all leaders are corrupt.
We know there are countless public servants who wake up every day with the intention of doing.
Right by their constituents.
But we cannot ignore the shadow cast by moments like this. When trust is eroded, it takes years, sometimes decades to rebuild.
The weight of.
Today's actions falls not just on the indicted official, but on every other public official, who must now work harder to earn the public's confidence in them. It's important to remember accountability isn't just about punishing those with alleged wrongdoings. It's about lifting the communities they've let down. It's about rebuilding, restoring, and reimagining what public servants can and should do. It's up to us to demand more from our leaders, to hold them to the highest standards, and to remind them that the power of public office should.
Never be abused.
While some may be disappointed today, let me encourage you not to be defeated. The strength of our communities, our faith in one another, and our collective resilience are far greater than the alleged failings of anyone individual. In closing, I'd like to thank the US Attorney for the Southern District of New York, Damien Williams and his office, Commissioner Joshlyn Strauber, and the New York City Department Investigation and her team, as well as my team, the Public Corruption Squad here at FBI New York.
Thank you.
I'd like to welcome up Commissioner Jocelyn Strauber from the New York City Department of Investigation.
Thank you, Damien.
Good morning.
Today, for the first time in New York City's modern history, we announced criminal charges against the City Mayor of New York City. As our highest elected official, the mayor should set the standard for all of city government and exemplify the integrity, transparency, and dedication to serving the public that all.
New Yorkers deserve.
Instead.
The indictment, unsealed today, alleges that Mayor Adams abused his power and position for nearly a decade as Brooklyn Borough President and as mayor to enrich himself and his mayoral campaigns. As charged, he sought and received illegal campaign contributions, luxury travel, and other personal benefits from foreign nationals, as well as individuals and businesses. He allegedly took steps to conceal those illegal contributions and personal benefits, and involved city employees and campaign staff in that concealment. As the indictment explains, this kind of corruption has real costs to the city and to the public. As alleged, the mayor's twenty twenty one campaign falsely certified compliance with campaign finance laws in order to conceal those illegal campaign contributions, and as a result of those false certifications, received over ten million dollars.
In public matching funds.
The Mayor's alleged acceptance and concealment of illegal contributions and personal benefits gave overseas benefactors, wealthy individuals and businesses undue influence over the mayor, influence that federal and local laws seek to prevent, and as charged in exchange for certain personal benefits, the mayor pressured the New York City Fire Department to forego a required fire safety inspection before the opening of the new Turkish Consulate building. As the city's inspector General, the Department of Investigation, a city agency, conducts its investigations confidentially and wholly independent of city Hall. He handled this investigation as we would any other, following the facts and seeking to hold wrongdoers accountable, no matter their role or title. Our unique access to city records and expertise in matters of city government make us a critical point.
We've been listening to Damian Williams, the US Attorney in Manhattan for the Southern Districts of New York. On your screen is Jocelyn Strauber, the New York Director of the Investigations Commission, alongside James Denahey, who's the Assistant Director in charge of the New York Field Office of the FBI, and they have been discussing the indictment charges of fraud of bribery against New York City Mayor Eric Adams. Bloomberg's David Gura has been tracking the press conference. They've explained the charges, David, Yeah, and.
I noted that each of them emphasized the fact that while this is the first time a sitting mayor of New York City has been indicted, that didn't color the way that they approached this particular case and what they've alleged here.
So just to sort of tick.
Through what we've learned over the course of this press conference, and also from that indictment itself, we see the mayor having played fast and loose with campaign finance laws. Yes, well he's been the mayor, but also before that, Damian Williams, the US Attorney for the Southern District, stressing this goes back to this time as the Brooklyn Borough President before he became the mayor. And really what this centers on are these kind of straw donations. So what you were hearing there just a moment ago, is how this played out in New York City. There is something here where if you or I or someone else gave money to a candidate, that would be matched by the city by eight to one ratio. So your dollar is worth eight and that's to encourage more small dollar dollar donations in our elections here. Effectively, what they're alleging is is that Eric Adams was taking big contributions from both corporations and the Turkish government, putting them through that matching program and getting a lot more money as a result. And then there is the more salacious counts of how he exploited his relationship with Turkish officials, both private and public, to get a whole lot of luxury travel. And we can talk more about this d but what stood out to me is just how much he used is teanbul as a conduits to sort of fly through go through on these trips abroad, and as Damian Williams there, the prosecutor said, got really tens of thousands of dollars worth of benefits luxurious travel benefit as a result of those relationships.
We have sixty seconds in the program, but before the presser, Mayor Eric Adams did speak.
What did he say.
He denied his allegations so they were based on lies, and vowed to fight them. And you've pointed out here that he's hired some very high profile council Alex Spiro rather, who represents Elon Musk, has represented him in a lot of matters, is going to be representing here as well. He is adamant, the mayor is adamant he can continue in that job as he fights.
Aliva said, We'll see.
How that plays out and how the democratic establishment in the city and the state responds to what we've learned this morning.
Yeah, what some of you said, they're interesting on Alex Spiro, that is an attorney that Elon Musk has used regularly in all sorts of litigation. Mayor Eric Adams has turned to him on this occasion, bloom makes.
David Gura, thank you. We will stick with this story.
More on the investigation and any market moves behind it throughout the day here on Bloomberg Television. New York Mayorrick Adams indicted on fraud and bribery charges.
This is Bloomberg
