New York State’s Trump Investigation

An analysis of the reported facts and applicable law

New York State’s Trump Investigation: An analysis of the reported facts and applicable law

With the media now reporting that criminal charges against the Trump Organization may be imminent, the question presents itself: what might be charged and will the former president be included?

In a new Brookings publication, four leading experts discuss the possible first case that reportedly may lie ahead shortly—and conclude that Trump is at risk of eventual indictment even if he is not named in that initial filing. This report analyzes the potential charges both the Trump Organization and Trump himself may face. The report also goes in depth into the defenses that may be available in response to any indictment.

The authors identify five possible areas of prosecutorial attention to Trump, his business and its executives:

1. Allegations of Falsifying Business Records

The report looks at New York’s law against falsifying the books and records of a business. That may apply if the company did not properly account for its handling of fringe benefits directed towards its CFO, Allen Weisselberg, or members of his family. The fringe benefits at issue reportedly include apartments, car leases and private school tuition.  The same statute may also apply to the company’s reported accounting for other disputed matters. That includes the reimbursement of hush money payments allegedly made at Trump’s direction to influence the outcome of the 2016 presidential election.

2. Alleged Tax Fraud

The authors analyze the possibility that New York will charge Trump and/or the Trump Organization with tax fraud relating to reports that the Trump Organization allegedly engaged in legally dubious behaviors relating to its taxes. The fringe benefits issues come into play here as well, for example with respect to whether payroll taxes were intentionally avoided. Other areas of potential exposure for Trump and his business include allegations about the tax treatment of approximately $26 million in questioned “consulting fees,” including some paid to the Trump family, and about $45 million in tax deductions for conservation easements on Trump properties; “loan parking” in connection with a Chicago property; and additional issues.

3 & 4. Alleged Insurance Fraud and Scheme to Defraud

The authors consider possible charges arising from the Trump Organization’s alleged inflation of its assets and occupancy rates to loan officers and insurance representatives while financial reports filed for tax purposes reported different numbers. With the apparent direction and knowledge of Trump, these overvalued assets were presented to lenders in statements of financial condition, which allegedly contained flawed financial numbers. The alleged misrepresentations of the Trump Organization’s assets could potentially lead the DANY to charge that enterprise, or Trump and his business associates, with a variety of offenses, including insurance fraud and a scheme to defraud in the first degree.

 5. Enterprise Fraud Allegations

The report analyzes the possibility that the DANY could file an enterprise corruption charge by establishing a “pattern of criminal activity.” Under New York law, any individual associated with the Trump Organization would be guilty of enterprise corruption if that person intentionally conducted or participated in the affairs of an enterprise with a pattern of criminal activity—such as the falsification of business records, insurance fraud, and a scheme to defraud—and engaged in three or more criminal acts. Prosecutors would have to prove that these acts were part of a common plan or scheme, rather than isolated incidents, and that the Trump Organization or its executives are in fact a criminal enterprise.

The report also goes in detail into the defenses that may be available to Trump, as well as the Trump Organization and others. This section offers a look at some of the arguments that are likely being made to prosecutors by defense counsel to attempt to forestall the filing of charges.

New York felony criminal violations generally have a statute of limitations of only five years and quite a bit of the conduct reportedly under investigation predates the five-year period. On the other hand, continuation of an ongoing criminal conspiracy and other tolling doctrines (such as the protracted absence of a defendant from the jurisdiction) can operate to extend statutes of limitations.

Prosecutors will also have to prove that Trump or anyone else charged had the specific intent to defraud. Trump and other defendants may rebut such proof by claiming that they relied on accountants, lawyers, and other professionals to do what was best for the company within the constraints of the law.  Trump, as is his wont, may also seek to deflect, pointing the finger at others who should be held criminally responsible.

Finally, the report notes that there are serious implications for our nation to indicting a former president, his business or his associates. In principle, however, the law applies equally to princes and paupers alike. A legal system that gives a free pass to the powerful would run contrary to the binding foundation of law that we have one system of justice, and that all are subject to it. As District Attorney Vance has stated: “No one—not even a president—is above the law.”

>> Download and read the report here. <<