High-ranking D.C. federal prosecutor resigns over order to freeze EPA funds

The Washington Post

15:36 JST, February 19, 2025

The head of the criminal division in the U.S. attorney’s office in D.C. resigned Tuesday morning after declining to comply with an urgent Trump administration demand to freeze the assets of a multibillion-dollar Biden administration environmental grant initiative, according to the official’s resignation letter and two people familiar with the matter.

Veteran prosecutor Denise Cheung’s resignation came in response to a Justice Department effort to assist President Donald Trump’s head of the Environmental Protection Agency, who said last week that he would try to rescind $20 billion in grants awarded by the Biden administration for climate and clean-energy projects, according to the two people, who spoke on the condition of anonymity because they weren’t authorized to discuss the matter publicly.

Cheung wrote in her resignation letter that while she and the FBI asked the bank handling the disbursements to freeze the assets immediately, she refused a last-minute order from interim U.S. attorney Ed Martin to compel the bank to do so. This demand came after the office of acting deputy attorney general Emil S. Bove requested she open what she considered an unfounded criminal investigation into the matter, according to a resignation letter obtained by The Washington Post.

“When I explained that the quantum of evidence did not support that action, you stated that you believed that there was sufficient evidence,” Cheung wrote of a demand by Martin to write the bank a second letter ordering the funds frozen “pursuant to a criminal investigation.” She added, “Because I believed that I lacked the legal authority to issue such a letter, I told you that I would not do so. You then asked for my resignation.”

Cheung’s account of two top Trump political appointees directing a hurried effort to halt billions of dollars in environmental grants approved under the Biden administration marked a profound departure from Justice Department policy and norms. Prosecutors warned that such steps by the Trump administration without adequate evidence or legal basis were a misuse of the Justice Department’s powers of criminal investigation, aiming them at political goals regardless of the law.

Cheung’s departure as the top supervisor overseeing federal criminal cases for the U.S. attorney’s office in the nation’s capital marks the latest shake-up of key federal prosecutors’ offices under the Trump administration. At least seven senior U.S. public corruption prosecutors resigned last week, including the interim U.S. attorney in Manhattan, Danielle Sassoon, and a top deputy, after Bove ordered the dismissal of corruption charges against New York Mayor Eric Adams (D), citing alleged political malfeasance and the case’s impact on Adams’s ability to carry out the administration’s immigration enforcement policies.

An eighth prosecutor resigned Monday, telling Attorney General Pam Bondi in a letter that he “can no longer serve the department I love.” Ryan R. Crosswell was a 10-year department veteran who worked as a trial attorney in the public integrity section, where five supervisors resigned last week over the Adams case.

The U.S. attorney’s office in D.C. has been a focus of the administration’s early weeks. Trump pardoned nearly all of the almost 1,600 defendants in the Jan. 6, 2021, Capitol riot, shocking prosecutors there who had handled the cases. Then the interim U.S. attorney fired Jan. 6 prosecutors and ordered two top supervisors – Cheung and Jon Hooks, the head of the office’s public corruption unit – to review how the office handled such cases.

The latest dustup, though, centered on a different matter entirely. EPA Administrator Lee Zeldin said on X that the agency would seek to revoke contracts for a still-emerging “green bank,” known as the Greenhouse Gas Reduction Fund, that is set to leverage public and private dollars to invest in tens of thousands of projects to fight climate change and promote environmental justice. Zeldin also said in a news release that he would refer the matter to the agency’s inspector general and work with the Justice Department.

Zeldin explained the decision to claw back the $20 billion in grants by citing a secretly recorded video from Project Veritas, a right-wing group known for its undercover sting operations, in which an EPA official said the Biden administration was “trying to get the money out as fast as possible before they come in and stop it all. … It truly feels like we’re on the Titanic and we’re throwing, like, gold bars off the edge.”

The money was deposited to Citibank and later transferred to eight private green banks, set up to fund green energy projects such as installing solar panels, making buildings more energy efficient and building charging stations for EVs, according to publicly available documents.

Zeldin said the EPA’s decision to send the money to green banks that would later lend the money to people and businesses “was purposefully designed to obligate all the money in a rush job with reduced oversight.” However, a former EPA official told The Post that it is common for the Treasury Department to reach financial agent agreements with banks to dole out federal money in instances in which an agency must “maintain oversight while providing more flexibility to leverage private partnerships,” such as with pandemic relief to airlines.

Zealan Hoover, who previously oversaw implementation of Biden’s climate law at the EPA, said the arrangement was developed over the course of a year “with extensive input from career staff at EPA and Treasury,” and the EPA’s Office of Inspector General was briefed “to ensure robust oversight systems were in place.”

In her resignation letter to Martin, Cheung said a representative of Bove’s office instructed her early Monday, a federal and banking holiday, that the department wanted to open a criminal investigation.

Later, the same member of Bove’s staff and Martin’s top deputy told her it would be sufficient for now for her to send a letter to the bank recommending it freeze the assets so no more money could be spent or withdrawn, Cheung wrote.

Cheung coordinated with a top supervisor in the FBI’s Washington field office to draft a letter to the bank. But Martin’s deputy, Principal Assistant U.S. Attorney Alicia Long, proposed adding language sought by Bove’s office stating that the Justice Department had “probable cause to believe” the funds were subject to asset seizure because of potential violations of law.

Cheung explained that the language – used to obtain court orders to obtain search, seizure and arrest warrants – was not appropriate because it wasn’t supported by evidence.

“Despite expressing some concern about the current lack of evidence of any apparent crime and the need to send out any such freeze letter,” Cheung wrote, she later learned Martin insisted he would order someone in his office to send the letter. The FBI agreed to write the bank on Monday but tempered its request to say it “recommended” a 30-day administrative freeze on the assets.

Cheung wrote that Martin was angry with her, then demanded she draft and send a second letter that ordered the bank to comply, and when she refused to do so, he asked for her resignation.

“As I shared with you, at this juncture, based upon the evidence I have reviewed, I still do not believe that there is sufficient evidence to issue the letter you described, including sufficient evidence to tell the bank that there is probable cause to seize the particular accounts identified,” Cheung wrote.

Martin and the U.S. attorney’s office did not immediately respond to requests for comment.

The Justice Department has the authority to freeze assets, but it can take that step only when it has evidence suggesting the assets can be traced to a crime. Cheung indicated in her letter that it was inappropriate and unethical to open an investigation without such evidence.

“Justice Department lawyers have it ingrained in them that the work is about adhering to the rule of law, and never about politics. To introduce politics into that decision-making is like poison,” said Barbara McQuade, a former U.S. attorney and University of Michigan law professor. McQuade said Cheung’s resignation letter described an “absolute abuse of power,” adding: “My reaction is physical disgust. I worry about the future of our Justice Department. … At some point the public is going to catch on that this just isn’t right.”

Bove’s office cited materials including a video of statements by a former executive agency official, and Cheung wrote that she notified the FBI that the U.S. attorney’s office believed that “there may be conduct that constitutes potential violations” of federal conspiracy and wire fraud statutes “that merits additional investigation,” but that the threshold for compelling bank action had not been reached.

Shortly after the letter was sent to the bank at about 7:28 p.m., Cheung said, she received calls from Long and Martin criticizing the “recommended” language that Cheung said was the same used in a draft she sent Long earlier in the day. Martin then directed a second letter be immediately sent under Martin’s and Cheung’s names ordering the bank “not to release any funds in the subject accounts pursuant to a criminal investigation.”

All eight green banks already have the money in their accounts, according to data from USASpending.gov. Some recipients told The Post they have already started sending the money to smaller community banks. Government officials would have to unwind those transactions to recover the money.

“Our funding is already obligated and in place and our program continues to move forward,” said Jeanne Mariani-Belding, a spokesperson for the Justice Climate Fund, a D.C.-based green bank that received $940 million from the EPA.