WASHINGTON, D.C. — Chief Judge James Boasberg quashed government subpoenas issued to the Federal Reserve on March 11 after the Justice Department found no evidence of a crime in its investigation of a $2.5 billion renovation project. The investigation delayed Senate consideration of the nomination of Kevin Warsh, President Donald Trump's pick to replace Jerome Powell as Federal Reserve Chair when Powell's term ends on May 15.

Assistant U.S. Attorney Andrew Massucco privately conceded under questioning by a judge that no evidence of a crime was found in the investigation of the Federal Reserve renovation project. In his March 11 ruling, Boasberg said the government had produced essentially zero evidence to suspect Fed Chair Jerome Powell of a crime and described prosecutors' justification for the subpoenas as thin and unsubstantiated.

The hearing on the Federal Reserve renovation project investigation took place on March 3 and was closed to the public. During that hearing, Boasberg pressed Massucco on the basis for the investigation. "So what false statements did (Powell) make before Congress?" Boasberg asked. "We don't know is my first answer. However, there are certain areas that he addressed that caused concern," Massucco responded.

When Boasberg asked, "And then what evidence is there of fraud or criminal misconduct in relation to the renovations?" Massucco replied, "Again, we do not know at this time. However, there are 1.2 billion reasons for us to look into it."

The Justice Department investigation focused on Jerome Powell's testimony before the Senate Banking Committee in June regarding cost overruns on the Federal Reserve's building renovations. The current estimated cost of the Federal Reserve's building renovation project is $2.5 billion, which is about $600 million higher than a 2022 estimate of $1.9 billion.

In his ruling, Boasberg wrote, "A mountain of evidence suggests that the Government served these subpoenas on the Board to pressure its Chair into voting for lower interest rates or resigning." The judge said the Justice Department rejected his offer to let the government submit further evidence against Jerome Powell directly to the court.

Robert Hur, who represented the Federal Reserve Board of Governors at the March 3 hearing, argued that political motivations were behind the investigation. "He clearly has very strong political motives to try to get lower interest rates, but because of the safeguards that have been erected by Congress around the Federal Reserve's independence when it comes to setting monetary policy, he can't get it," Hur said.

Jeanine Pirro, President Donald Trump's pick to lead the U.S. Attorney's Office for the District of Columbia, vowed to appeal the court's decision quashing the subpoenas. A spokesperson for the Federal Reserve declined to comment on the investigation.