March 24, 2026 / 11:54 PM EDT / AP
The Justice Department’s investigation of a $2.5 billion Federal Reserve renovation project found no evidence of a crime, a federal prosecutor privately conceded during a closed hearing earlier this month, according to a transcript of the sealed proceeding.
Assistant U.S. Attorney Andrew Massucco made the admission at a March 3 hearing, the transcript shows. Eight days later, Chief Judge James Boasberg quashed government subpoenas issued to the Federal Reserve, a major setback for the inquiry. 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.”
At the hearing, Boasberg pressed Massucco, of U.S. Attorney Jeanine Pirro’s office, to identify any evidence of fraud or criminal misconduct connected to Powell’s testimony about the renovations or the construction itself. “So what false statements did (Powell) make before Congress?” the judge asked. “Well, we don’t know is my first answer,” Massucco replied. When asked what evidence there was of fraud in relation to the renovations, Massucco said, “Again, we do not know at this time. However, there are 1.2 billion reasons for us to look into it,” referring to alleged cost overruns.
The Washington Post first reported details from the transcript. The probe has delayed Senate consideration of Kevin Warsh, President Trump’s nominee to replace Powell when his term ends May 15; Powell can remain as chair past that date if no replacement is confirmed.
Boasberg suggested the subpoenas appeared aimed at pressuring the Fed’s chair on monetary policy. “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,” he wrote. Massucco told the judge there was no evidence that the subpoenas’ motive was anything other than “trying to find the truth of the matter” and said the office had a right to investigate.
Robert Hur, who represented the Federal Reserve board at the hearing, argued the subpoenas were part of a pressure campaign tied to Mr. Trump’s push for lower interest rates. Pirro, a former Fox News host and the president’s pick to lead the U.S. Attorney’s office in Washington, criticized Boasberg as an “activist judge,” accused him of neutering the grand jury’s investigative power and vowed to appeal, calling the ruling “wrong and … without legal authority.” A Fed spokesperson declined to comment.
The investigation focused on Powell’s brief June testimony to the Senate Banking Committee about cost overruns on the Fed’s building renovations. The Fed’s most recent estimate places the project at roughly $2.5 billion, about $600 million higher than a $1.9 billion 2022 estimate. Boasberg said the Justice Department rejected his offer to let the government submit further evidence directly to the court so as not to tip its hand to the Fed or Powell, leaving the court “with no credible reason to think that the Government is investigating suspicious facts as opposed to targeting a disfavored official.”