Mr. Berman was appointed to the Manhattan post in January 2018 by then-Attorney General Jeff Sessions, after President Trump personally interviewed him for the job.
Photo: Mary Altaffer/Associated PressA high-stakes fight over control of the nation’s most prominent federal prosecutor’s office broke out Friday night, as Manhattan U.S. Attorney Geoffrey Berman rejected Attorney General William Barr’s assertion that Mr. Berman had resigned from his post.
Mr. Barr said in an email shortly after 9 p.m. Friday that Mr. Berman, whose office has overseen investigations into President Trump’s closest allies, was stepping down. Two hours later, Mr. Berman responded that he only learned he was “‘stepping down’ as United States Attorney” from the press release issued by Mr. Barr’s office.
“I have not resigned, and have no intention of resigning, my position, to which I was appointed by the Judges of the United States District Court for the Southern District of New York,” Mr. Berman said in a statement released by the office spokesman. “I will step down when a presidentially appointed nominee is confirmed by the Senate. Until then, our investigations will move forward without delay or interruption.”
The exchange—in which a U.S. attorney refused to be fired by his boss, the most powerful figure in American law enforcement—sets up a showdown in the Justice Department several months before a presidential election.
Mr. Trump plans to nominate Jay Clayton, chairman of the Securities and Exchange Commission, as Mr. Berman’s replacement as U.S. attorney for the Southern District of New York, according to a statement issued Friday by the White House. Craig Carpenito, currently the U.S. Attorney in New Jersey, was positioned to serve as acting U.S. Attorney in Manhattan starting July 3, while the Senate considers Mr. Clayton’s nomination, Mr. Barr said.
A 1979 opinion by the Justice Department’s Office of Legal Counsel concluded that the president can remove court-appointed U.S. attorneys like Mr. Berman, but the attorney general lacks that power.
Mr. Berman was initially appointed as a temporary U.S. attorney. His appointment was later made permanent by the Southern District’s chief judge, not through the traditional nomination and confirmation process.
In his email Friday, Mr. Barr praised Mr. Berman, saying “Geoff has done an excellent job leading one of our nation’s most significant U.S. Attorney’s Offices, achieving many successes on consequential civil and criminal matters. I appreciate his service to the Department of Justice and our nation, and I wish him well in the future.”
A Justice Department official said that Mr. Clayton told administration officials he was considering leaving government but was interested in serving as top federal prosecutor in Manhattan and that Mr. Barr agreed it was a good idea.
The official said Mr. Barr also offered Mr. Berman a job leading the Justice Department’s civil division in Washington, after Jody Hunt announced this week he planned to resign, but Mr. Berman declined. Mr. Berman couldn’t be reached for comment on this matter.
Reached late Friday, Mr. Clayton declined to answer detailed questions but said he was “pending confirmation, fully committed to my job at the commission.”
House Judiciary Committee Chairman Jerrold Nadler, (D., N.Y.), said in a tweet Friday night that he would invite Mr. Berman to testify during a Wednesday oversight hearing that had been previously scheduled to examine what Democrats describe as Mr. Barr’s politicization of the Justice Department and interference in criminal cases.
In a statement Friday night, Senate Minority Leader Chuck Schumer (D., N.Y.) wrote that the dismissal “reeks of potential corruption,” adding: “What is angering President Trump? A previous action by this U.S. Attorney or one that is ongoing?”
Mr. Berman was appointed to the Manhattan post in January 2018 by then-Attorney General Jeff Sessions, after Mr. Trump personally interviewed him for the job. At the time, Mr. Berman was a partner at Greenberg Traurig LLP, which was also Rudy Giuliani’s law firm.
That background gave some Democrats reservations about Mr. Berman’s appointment. But those reservations faded, as the U.S. attorney’s office—considered one of the most ambitious, independent and powerful prosecutor’s offices in the country—led investigations into some of Mr. Trump’s closest allies. Those investigations led to the 2018 conviction of Mr. Trump’s former personal lawyer Michael Cohen, and included a probe of Mr. Trump’s inaugural committee and an ongoing investigation into Mr. Giuliani himself.
Mr. Barr’s announcement of Mr. Berman’s departure was met with shock within the Manhattan U.S. attorney’s office, and prompted wide speculation about whether Mr. Berman had been fired.
Reports of tensions between Mr. Barr and Mr. Berman began circulating almost immediately after Mr. Barr was sworn in as attorney general in early 2019. Mr. Barr at the time sought information from the Manhattan federal prosecutor’s office about two cases involving the Trump administration, according to people familiar with the matter. One was an investigation into hush-money payments made to two women who alleged affairs with Mr. Trump, which had led to Mr. Cohen’s guilty plea the year before. The other was an investigation into alleged campaign-finance violations involving associates of Mr. Giuliani.
Mr. Barr expressed skepticism at the time about the prosecutors’ theories about those cases, which created tensions between the offices. Mr. Barr also intervened in other cases involving parties close to the administration. The two offices also clashed over the Southern District’s prosecution of a Turkish bank that allegedly helped Iran evade U.S. sanctions, people familiar with the matter said.
The Manhattan federal prosecutor’s office has also been caught in the middle of a dispute between the Manhattan district attorney’s office and Mr. Trump over the production of the president’s tax returns.
Mr. Barr has also recently shaken up the leadership of the U.S. attorney’s office in the District of Columbia, which is also handling a number of politically sensitive cases involving Mr. Trump’s associates. He installed a close aide to lead the office before installing an acting U.S. attorney there.
Mr. Clayton, a political independent and former Wall Street deals lawyer, took over the SEC in May 2017, following an appointment by Mr. Trump. His priorities have included easing some public-company reporting regulations, reining in fees charged by stock exchanges and passing a sweeping new regulation that restricts stockbrokers’ conflicts of interest, including those tied to sales commissions.
The idea of moving Mr. Clayton to the top federal prosecutor role in Manhattan came together in the past couple of weeks, a person familiar with the matter said. Administration officials asked Mr. Clayton what role he would want during Mr. Trump’s second term, and the SEC chairman responded that he would like to be U.S. attorney for the Southern District of New York, the person said.
Mr. Clayton doesn’t have experience as a federal prosecutor.
While SEC chairman, Mr. Clayton has mostly enjoyed support on Capitol Hill. Many Democrats were initially skeptical of his Wall Street background, but Mr. Clayton has largely avoided the partisan fights over regulations that some preceding SEC chairmen were drawn into.
Mr. Clayton was expected to return to New York by the end of Mr. Trump’s first term. He is widely regarded as a strong manager best known for advising high-profile clients, such as investment banks Lehman Brothers and Barclays PLC during the financial crisis, before he moved into government.
His career before joining the SEC was spent at law firm Sullivan & Cromwell LLP, which has represented Goldman Sachs Group Inc. among other Wall street clients.
During Mr. Clayton’s tenure as SEC chairman, the SEC’s enforcement division has focused on what Mr. Clayton calls “Main Street” investor protection. The agency has produced relatively few cases against Wall Street banks, while cracking down on murky fees charged by investment advisers and brokers that reduce returns for investors and going hard after sellers of cryptocurrency whose deals were considered unregistered securities offerings.
—Aruna Viswanatha contributed to this article.
Write to Rebecca Davis O’Brien at Rebecca.OBrien@wsj.com, Dave Michaels at dave.michaels@wsj.com and Sadie Gurman at sadie.gurman@wsj.com
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