Justice Department’s Case Against Federal Reserve Falters Amid Lack of Substantiated Evidence

The U.S. Department of Justice’s high-profile investigation into the Federal Reserve’s $2.5 billion renovation project has suffered a significant setback, after prosecutors privately acknowledged they had uncovered no concrete evidence of criminal wrongdoing.

According to a sealed court transcript from a March 3 hearing, Assistant U.S. Attorney Andrew Massucco conceded under questioning that the government could not identify any false statements or fraudulent activity linked to Federal Reserve Chair Jerome Powell. The admission came during a closed-door session before Chief Judge James Boasberg, who repeatedly pressed prosecutors to substantiate their claims.

When asked directly what false statements Powell had made before Congress, Massucco responded candidly, “We don’t know,” adding only that certain aspects of Powell’s testimony had raised unspecified concerns. Pressed further on whether there was any evidence of fraud or criminal misconduct tied to the renovation project, the prosecutor again acknowledged that no such evidence had been identified at this stage, pointing instead to the scale of the project’s cost overruns as justification for continued scrutiny.

The exchange underscored the fragile foundation of the government’s case — a reality that became decisive just days later. On March 11, Judge Boasberg formally quashed the subpoenas issued to the Federal Reserve, delivering a major blow to the investigation. In his ruling, the judge stated that the Justice Department had presented “essentially zero evidence” to support suspicions of criminal conduct, describing the legal basis for the subpoenas as “thin and unsubstantiated.”

Boasberg also noted that prosecutors declined an opportunity to submit additional evidence for confidential judicial review — a move that could have strengthened their position without revealing sensitive details to the Federal Reserve or Powell. In the absence of such evidence, the court found no credible justification for the investigation’s direction.

“The Court is thus left with no credible reason to think that the Government is investigating suspicious facts as opposed to targeting a disfavored official,” Boasberg wrote in a sharply worded conclusion.

The investigation, led by the Washington office of U.S. Attorney Jeanine Pirro, had focused in part on Powell’s testimony before the Senate Banking Committee last June, where he addressed rising costs associated with the Federal Reserve’s extensive building renovations. Current estimates place the project at approximately $2.5 billion — roughly $600 million higher than the $1.9 billion projection outlined in 2022.

While the scale of the cost increase drew political and institutional attention, the court’s findings indicate that, at least for now, those concerns have not translated into evidence of legal violations. A spokesperson for the Federal Reserve declined to comment on the matter.

The details of the sealed hearing were first reported by The Washington Post, bringing rare public visibility to the internal dynamics of an investigation that now appears increasingly difficult to sustain.