Tax Return Fight Indicates Trump May Face State Criminal Charges

Update: On August 20, District Court Judge Marrero granted Vance’s motion to dismiss the new complaint. The Second Circuit granted a stay of that order, but on October 7 it affirmed the dismissal. Absent intervention by the U.S. Supreme Court, the grand jury should have the records soon.

Manhattan District Attorney Cyrus Vance, Jr. appears close to obtaining president Trump’s tax records. Vance first subpoenaed the records about a year ago. Last month the U.S. Supreme Court rejected Trump’s claim that the subpoena should be rejected because the president is absolutely immune from state criminal investigations. Trump’s attorneys then filed a new complaint once again challenging the subpoena, claiming it is overbroad and was issued in bad faith. Vance has now moved to dismiss that complaint. The DA seems likely to prevail and ultimately get the records. And although it’s unlikely that anything contained in the returns will be made public before the election, Vance’s pleading filed last Monday suggests that Trump could be facing a range of New York state criminal charges if he leaves office in 2021.

Manhattan DA Cyrus Vance Jr.
Manhattan DA Cyrus Vance, Jr.

The Vance Subpoena and Trump’s Lawsuit

Vance’s office opened an investigation in the summer of 2018 into unspecified financial crimes by New York businesses and individuals. Initially, at least, it appeared the investigation was prompted by reports of “hush money” payments by Trump and/or his campaign to two women, Karen McDougal and Stormy Daniels, shortly before the 2016 presidential election. In August of 2018 Trump’s personal attorney, Michael Cohen, pleaded guilty to a campaign finance crime related to those payments. During his plea Cohen said he had made the payments at the direction of candidate Trump himself. Vance’s office apparently began an investigation into whether the payments, and how they were documented in corporate records, may have violated New York law.

In August of 2019 the prosecutors, acting on behalf of a grand jury, issued a subpoena for documents to Mazars USA, LLP, Trump’s personal accounting firm. The subpoena directed Mazars to produce financial records relating to Trump and his businesses, including copies of the president’s tax returns for the past eight years.

In September 2019 the president filed a lawsuit in federal district court in New York, seeking an injunction against Vance and Mazars to prevent enforcement of the subpoena. Trump claimed that under the U.S. Constitution a sitting president is absolutely immune from state criminal process. He also argued the subpoena was overbroad and that Vance was acting in bad faith and for political reasons. (Throughout the litigation Mazars has taken the position that the fight is between Vance and Trump and that Mazars stands ready to honor the subpoena if that’s how the courts rule.)

The district court judge rejected the president’s arguments. The judge found there was no basis for the president’s sweeping claim of immunity and that Mazars complying with the subpoena would not impair the president’s ability to fulfill his constitutional duties. The judge also rejected the president’s claims of overbreadth and bad faith.

The Second Circuit Court of Appeals affirmed the trial judge, finding that immunity was not constitutionally required. It noted that Trump had failed to identify any constitutional harm or interference with his duties because the subpoena, directed to Mazars, did not “require the President to do anything at all.” An appeal from the Second Circuit decision was fast-tracked to the U.S. Supreme Court.

Image of US Supreme Court

The Supreme Court Decision

On July 9, 2020, the U.S. Supreme Court, in an opinion by Chief Justice Roberts, also rejected Trump’s claims. Reaching back to an early dispute involving Aaron Burr and president Thomas Jefferson, the Court traced a long history of cases finding that presidents, like other citizens, are not above the law and may be subpoenaed to provide testimony or evidence. Although this was the first time the Court had confronted the question in the context of a state proceeding rather than a federal one, the Court concluded that did not compel a different result.

The Court was unanimous in rejecting Trump’s claim of absolute immunity. Trump argued that immunity was required because complying with such a subpoena would impermissibly distract him from fulfilling his constitutional duties. But the Court noted that it had already rejected immunity based on purported presidential distraction, most notably in the unanimous 1997 decision in Clinton v Jones that president Clinton was not immune from a civil suit based on actions before he took office. Similarly, the Court concluded, “two centuries of experience confirm that a properly tailored criminal subpoena will not normally hamper the performance of the President’s constitutional duties.” The Court also rejected Trump’s claims that immunity was required in order to avoid the “stigma” of being under investigation and to prevent presidential harassment by state prosecutors.

The majority also rejected the alternative argument, advanced by the U.S. Solicitor General, that a subpoena directed at a sitting president should have to meet a higher standard of justification before it can be enforced. The Court noted these arguments were based primarily on cases involving Executive privilege. But such cases were not relevant here because this subpoena was directed at the president’s personal records. Requiring a higher standard, the Court held, would improperly “extend protection designed for official documents to the President’s private papers.”

Although the Court rejected the president’s claims, it did not leave Trump with no possible remedy. Given his constitutional position, the Court held, a president may challenge a particular subpoena as an improper attempt to influence or impede his performance of his official duties. And the president also has the remedies available to any person to challenge a grand jury subpoena, including arguing that the subpoena is unduly burdensome, overly broad, or based on bad faith. But any such claims were not part of the appeal to the Supreme Court.

The Court concluded:

Two hundred years ago, a great jurist of our Court established that no citizen, not even the President, is categorically above the common duty to produce evidence when called upon in a criminal proceeding. We reaffirm that principle today and hold that the President is neither absolutely immune from state criminal subpoenas seeking his private papers nor entitled to a heightened standard of need.

The President’s New Complaint

The Supreme Court’s decision did not end the matter. With the case back in the trial court, the president quickly moved to bring some of the other challenges the Supreme Court said were still available. On July 27 the president filed a Second Amended Complaint, seeking once again to enjoin compliance with the subpoena. That complaint alleges, once again, that the subpoena is overbroad and that Vance is acting in bad faith.  Notably, the complaint does not raise any of the potential claims unique to the president that were identified by the Supreme Court; for example, that complying with this particular subpoena would influence or impede Trump’s performance of his presidential duties. Presumably the president’s attorney concluded such an argument would be futile because, as the Second Circuit noted, the subpoena to Mazars actually doesn’t require the president to do anything at all.

Vance’s Motion to Dismiss

This past Monday, Vance filed a motion to dismiss the Second Amended Complaint, arguing that the complaint does not state any grounds for relief. It claims the subpoena is overbroad or was brought in bad faith, but as Vance notes, the trial judge has already rejected those same arguments in the earlier proceedings. In short, according to Vance: nothing new here.

One section of Vance’s pleading attracted considerable attention. Concerning the claim that the subpoena is overbroad, Vance notes this claim depends on the assumption that the investigation is limited to the so-called “hush money” payments in 2016. But Vance says this is incorrect: “at the time the Mazars Subpoena was issued, there were public allegations of possible criminal activity at Plaintiff’s New York County-based Trump Organization dating back over a decade.” Vance notes that his office earlier filed a redacted declaration describing the full scope of the investigation, and that based on that declaration the court had already ruled the subpoena is not overbroad.

Vance’s pleading cites newspaper articles referring to allegations by Michael Cohen and others that Trump may have manipulated the values of his holdings when dealing with banks and insurance companies and may have engaged in other questionable financial practices. These allegations could potentially lead to New York state criminal charges for crimes such as bank fraud, insurance fraud, or tax fraud. That is why the subpoenaed records are relevant, even though they extend back much further than 2016.

The Standard for Challenging a Grand Jury Subpoena

The president is facing an uphill battle in challenging the grand jury subpoena. A properly issued grand jury subpoena is presumed to be reasonable. Because it is an investigative body, a grand jury is allowed to cast a wide net when gathering information about possible crimes. It may investigate based on news reports, anonymous tips, or other investigative leads that fall far short of establishing probable cause or actual criminality. As the Supreme Court held in the leading case of United States v. R. Enterprises, the government cannot be required to establish probable cause to justify a grand jury subpoena because the very purpose of the grand jury investigation is to determine, at the conclusion of that investigation, whether probable cause exists.

In his dissent in the Supreme Court case, Justice Alito noted how difficult it would be for the president to establish that Vance’s subpoena is improper: “In New York, a grand jury subpoena need not be supported by probable cause . . . and a party seeking to quash a subpoena must show that the documents sought ‘can have no conceivable relevance to any legitimate object of investigation.’” (citations omitted). But this standard is not unique to New York; in fact, this is the general law governing all grand jury subpoenas and basically mirrors the Supreme Court’s holding in R. Enterprises.

Grand jury secrecy makes it tough for any litigant to successfully argue that information sought by a subpoena could not possibly be relevant to the grand jury’s work. As Vance argues, the president can’t plausibly claim the subpoenaed materials are outside the scope of the grand jury’s investigation because he doesn’t know what the full scope of that investigation is – and isn’t entitled to know.

It’s possible that after reviewing the documents the grand jury will conclude that no charges are appropriate, or that it does not have jurisdiction over certain offenses, or that certain crimes are time-barred. But the recipient of a subpoena – including the president – generally cannot prevent the grand jury from even examining the documents it needs in order to reach such conclusions.

Under the law governing grand jury subpoenas, Vance should prevail and ultimately get the documents. How quickly that will happen depends on the almost certain further appeals by the president and how long it takes to get those resolved. If the trial judge rules in Vance’s favor, the court of appeals may be reluctant to grant a stay, which would mean Mazars would be free to comply and turn over the documents. That could potentially happen within the next month or so.

Stalling for Time

It seems pretty clear at this point that the primary purpose of this litigation by the president is to stall for time. As Vance notes, the president has already succeeded in delaying compliance with the subpoena for nearly a year. This has prevented the grand jury from potentially completing its work prior to the upcoming presidential election. Perhaps more significantly, delay creates the risk that the statute of limitations will expire as to some charges. As Vance argues: 

Every day that goes by is another day Plaintiff effectively achieves the ‘temporary absolute immunity’ that was rejected by this Court, the Court of Appeals, and the Supreme Court. Every such day also increases the prospect of a loss of evidence or expiration of limitations periods – the precise concerns that that the Supreme Court observed justified its rejection of Plaintiff’s immunity claim in the first place.  

When it comes to statutes of limitations, Vance may have some options. If he finds an ongoing conspiracy or other continuing offense, for example, then the statute of limitations will not start to run until the most recent act in furtherance of the conspiracy, even if other criminal acts involved are too old to be charged. But it’s undeniably true that delay hurts his investigation and that potential charges could be foreclosed.

What Happens When Vance Gets the Documents?

Assuming Vance prevails and gets the documents, the public shouldn’t expect to see the tax records any time soon, if at all. They will be protected by grand jury secrecy, and as the Supreme Court noted, improper disclosure of grand jury materials is punishable as a felony in New York. During the Supreme Court arguments Justice Alito suggested he believes there is some kind of a pipeline between the DA’s office and the New York Times and that a leak is virtually inevitable, but I don’t think we should expect that to happen. If there ultimately are indictments, then depending on the nature of the charges some of the information contained in the tax records could end up being revealed.

As far as timing, many have assumed that Vance, a Democrat, is politically motivated and will try to bring a case prior to the election in order to damage Trump. But even if that were his goal, things would have to move awfully fast. Vance’s office would have to complete all court battles over the subpoena, get the documents (which are undoubtedly voluminous), review them, complete any additional required investigation, and obtain indictments in just three months. That seems very unlikely to me.

Practicality aside, it would of course be improper for Vance to act based on political motives. And if he actually has a case, he’d be much better off waiting until after the election.  Any “October surprise” indictments, regardless of their merits, would be attacked and discredited as politically motivated. And if Trump leaves office in 2021, Vance could act at that time without facing any of the constitutional issues that would arise from a state prosecution of a sitting president. If a statute of limitations expiring before November is a concern, Vance could obtain sealed indictments and then wait to reveal them until after the election. He could even seek a waiver of the statute of limitations by the president, as is sometimes done during lengthy investigations.

The real significance of this subpoena battle lies not in how it might affect the election but in what happens after November if Trump is defeated. Vance’s filing demonstrates that Trump and his organization are in some real criminal peril. And even if Trump were to try pardoning himself for any crimes on the way out the door of the White House — as many expect — presidents cannot grant pardons of state charges. New York would remain free to act.

This all suggests a real possibility of yet another unprecedented event: a new president being sworn in, and the former president facing state criminal prosecution shortly thereafter.

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Mueller’s Potential Interview of President Trump: Q & A

Will Robert Mueller interview president Trump? Trump’s attorney John Dowd recently resigned, reportedly in part because the president was resisting his advice to refuse to be interviewed. Following the raids on the office and home of Trump’s personal attorney Michael Cohen, Trump was said to be “rethinking” whether he would agree to an interview after all. Then Rudy Giuliani joined the president’s legal team and suggested the possibility of an interview was still on the table. Finally, last week, the New York Times published a leaked list of about four dozen questions Mueller reportedly wants to ask Trump if an interview takes place. Trump himself has repeatedly claimed, including as recently as last week, that he’d love to sit down with Mueller.

In light of these developments, it seems like a good time to review some of the issues surrounding the possible interview.

Will Robert Mueller interview president Trump

Special Counsel Robert S. Mueller, III

What Does Mueller Want to Ask Trump?

If the New York Times list of questions is accurate, it appears Mueller wants to ask about two areas: 1) obstruction of justice; and 2) involvement with Russians in connection with the election. No real surprise there; those two issues are at the heart of Mueller’s inquiry. The list does not include any questions about more tangential areas, such as the president’s personal finances or hush money payments to porn stars.

About three-quarters of the questions relate to possible obstruction of justice by Trump himself.  Many of these questions ask what the president was thinking when he did things like firing James Comey. They relate to the central issue in any obstruction of justice case: corrupt intent. Why the president did certain things is critical. If done with the corrupt intent to interfere with the Russia investigation, otherwise lawful acts could become obstruction of justice.

The other set of questions focuses on contacts and interactions with Russians by members of the Trump campaign and Trump himself. These relate to the issue of so-called “collusion” – conspiracy with Russians to influence the election, perhaps in exchange for easing U.S. sanctions against Russia if Trump won.

These questions demonstrate the investigation into a possible Russian conspiracy is still very active. Mueller has already indicted thirteen Russian nationals and three Russian companies for interfering with the election, primarily through social media. But there are a whole host of events that have not yet resulted in charges, including the stolen and leaked Democratic emails, the pro-Russia change in the Republican party platform, and alleged discussions about easing sanctions. That Mueller wants to question the president about these details is an indication there may be more to come from the special counsel concerning conspiracies to influence the election.

Does Mueller Need the Interview?

Need?  Not really. Prosecutors are accustomed to proving their cases without the opportunity to interview people at the top. Those under investigation frequently assert their rights under the Fifth Amendment and refuse to be questioned. Whether or not Trump ever speaks with Mueller will not determine whether Mueller will be able to proceed, whether on obstruction of justice or on a Russian conspiracy.

That being said, there’s no doubt the interview would be extremely useful for Mueller – and for the country. As the candidate and head of the campaign, Trump likely knows a great deal about any interactions his campaign had with the Russians. And when it comes to possible obstruction of justice, Trump alone really knows what was going on in his head when he did things like fire Comey. Given the opportunity, any prosecutor would love to hear from the potential defendant’s own mouth why he did what he did.

Doesn’t Mueller Already Know all the Answers?

In the news coverage about Mueller interviewing Trump, commentators and journalists frequently repeat the old saying, “A good lawyer never asks a question to which he/she doesn’t know the answer.” The suggestion is that Mueller simply wants to question Trump to see whether what he says is consistent with information Mueller already has. But that’s not the whole story.

That saying about the good lawyer is true (or mostly true, anyway) when it comes to a trial. But it’s not true for an investigative interview or grand jury. A trial is a presentation to a jury of an assembled case, and the lawyer should indeed already know the answers to the questions. But an investigation is an exploration to gather facts and determine whether a case exists. Investigators ask questions to which they don’t know the answer all the time. If you only asked questions to which you already knew the answer, you would never advance your investigation very far.

Unfortunately, incorrectly repeating this trial lawyer aphorism feeds the false defense narrative that the only reason Mueller wants to interview Trump is to try to catch him in a lie or create a “perjury trap.” If Mueller already knows everything, why else would he want to talk to the president?

The truth is that Trump is uniquely positioned to have relevant information about this case, including some information that no one else may have. Mueller certainly has some information about each area of questioning, and will have theories about what the answer is. But if given the opportunity Mueller will definitely be asking some questions to which he does not know the answer, and would expect to learn at least some new information.

Will president Trump be interviewed by Robert Mueller?

Does Trump Really Have a Choice?

Yes. The important distinction here is between an interview and a grand jury appearance. When it comes to an interview, the president does have the right to refuse. No one is required to talk to federal prosecutors or investigators. If agents come knocking on your door, you’re free to tell them to get lost. (It’s true we should hold a president to a higher standard, but that’s a political and moral issue, not a legal one.)

That’s why there has been all the back and forth about the possible terms and conditions of an interview. Trump’s lawyers have the ability to try to negotiate more favorable terms because Mueller knows they could ultimately refuse to agree to any interview at all.

But in the end Mueller holds the ultimate Trump card (sorry) – the grand jury subpoena power. News reports last week indicated that during negotiations with Trump’s lawyers Mueller has already floated the option of subpoenaing the president. Although everyone has the right to refuse a voluntary interview, no one has the right to refuse a grand jury subpoena. A subpoena compels the witness to attend and testify under oath, absent some kind of a legal privilege.

Both sides therefore have some leverage and both have some incentive to compromise. Mueller knows Trump could walk away and refuse the interview, forcing him to decide whether to issue a subpoena. And Trump knows that if he does refuse an interview, Mueller has the option of going down the grand jury subpoena road.

How Would a Grand Jury Appearance Differ from an Interview?

Grand jury testimony is under oath and therefore subject to perjury and an interview typically is not, but legally that makes little practical difference. It’s still a crime to lie to investigators during an unsworn interview. That crime is called false statements, the crime to which Michael Flynn and George Papadopoulos pleaded guilty.

The biggest difference is that during a grand jury appearance the witness is examined in the grand jury room by the prosecutor without the presence of his attorney. The lawyer is outside the room and the witness may step out to consult, but counsel is not present during the questioning.

During a voluntary interview defense counsel is present and can participate by seeking clarifications, objecting to questions, interacting with the prosecutors, and consulting with the client. For that reason, all else being equal, a voluntary interview generally is much friendlier terrain for the defense than a grand jury appearance.

Will Trump Agree to an Interview?

It’s unlikely. I’ve thought for some time that ultimately Trump will refuse to be interviewed, for reasons I explained here. It’s just too dangerous for him. Even if his underlying conduct ends up not being criminal, lying during the interview would be a separate crime. Trump’s frequent lies on all kinds of topics have been well documented, and even his own lawyers have suggested he might not tell the truth during an interview with Mueller.  You’d be hard pressed to find any lawyer familiar with this case who would recommend that Trump agree to this interview.

The president’s strategy thus far has been to attack the investigators and call the investigation an unfair “witch hunt.” In the end I believe he will refuse to be interviewed and will claim that, although he has nothing to hide and personally would love to take on Mueller, his lawyers say he can’t subject himself to such an unfair process.

What If Trump Refuses to be Interviewed?

If Trump refuses to be interviewed, then the ball will be in Mueller’s court. He will have to decide whether to subpoena the president to the grand jury. As I noted above, unlike an interview, a grand jury subpoena is mandatory. A witness who refuses to appear without a valid legal excuse can be held in contempt and be jailed.

But of course when the witness is the president of the United States it’s not quite that simple. Whether the president can be subpoenaed to testify in the grand jury has never been definitely settled by the Supreme Court. The Court did hold in the Paula Jones case that the president is not immune from appearing in a civil case based on conduct that took place before his presidency. In the Nixon case the Court ruled a president has no blanket right to refuse to comply with a grand jury subpoena for documents and records. Most legal observers believe that if the question of a grand jury subpoena of the president for testimony came before the Court, it would again hold that the president is not above the law and must comply like any other citizen.

But there’s no doubt that Trump’s lawyers could tie things up for a while. They could mount constitutional challenges to the subpoena based not only on the president’s unique status as the head of the executive branch but also on claims of executive privilege. Even if the courts fast-tracked the case, it would certainly take a number of months to resolve.

Mueller may well conclude that the time and effort involved in issuing and fighting over a subpoena is not worth the resulting delay in his investigation. That’s particularly true considering that, even if Mueller were ultimately to prevail, the president could end up taking the Fifth in the grand jury and leave Mueller without the information anyway.

Can Trump take the Fifth? What Would Happen Then?

Yes, if subpoenaed to the grand jury, Trump could assert his Fifth Amendment right not to incriminate himself and refuse to testify. This past weekend Rudy Giuliani suggested that Trump might take the Fifth. That’s his right if his fear of incrimination has a good-faith basis. The question then becomes what would be the political consequences.

Some commentators have suggested that taking the Fifth would be the end of Trump’s presidency; that it would surely be the straw that breaks the camel’s back and leads to impeachment. I’m not so sure. It seems at least as likely to me that Trump could simply repeat his claims of a “witch hunt” and say he was forced to assert the Fifth because the entire investigation is political and unfair. If he did that, his political base and Fox News may well stay with him – and if they stay with him, Republicans in Congress may stay with him as well. Eighteen months ago I would have agreed that any president forced to take the Fifth would certainly be a goner. But in the age of Trump I’m no longer convinced that’s the case. It may just be that there would be a few days of outrage and then the country’s attention would shift to whatever new scandal comes along.

In terms of Mueller’s investigation, if the president takes the Fifth Mueller will just go on to complete the investigation without Trump’s testimony. And as I mentioned above, not having testimony from those at the center of the investigation is not at all unusual for a prosecutor.

What if Trump Just Refused to Honor the Grand Jury Subpoena?

It’s possible that even if the Supreme Court upheld a grand jury subpoena, Trump could refuse to appear. In an ordinary case, that would result in the court sending U.S. Marshals to arrest the witness, and the witness could be jailed until he agreed to testify. But with the president that raises obvious difficulties – not the least of which would be the possible stand-off between the Secret Service and the Marshals. It all starts to sound like the plot of a bad political thriller on cable television.

This is where we get into some scary possibilities. During Watergate, in the end our institutions survived because when the Supreme Court ruled against Nixon he didn’t defy the Court. He agreed he was bound by the Court’s order and resigned shortly thereafter. During the presidential election of 2000, Al Gore ultimately accepted the decision of the Supreme Court and bowed out, avoiding a potential further crisis over the outcome.

The Supreme Court’s power depends entirely on our national commitment to the rule of law. We don’t have any real experience with what happens if the Court rules against a president who doesn’t necessarily share that commitment.

That’s where the idea of a “constitutional crisis” becomes real. If Trump were to defy a ruling of the Supreme Court, he would truly be placing himself above the law. Presumably that would finally be a bridge too far and Congress would move to impeach him. And presumably, if that happened, Trump would agree to abide by the outcome of the impeachment process.


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