The office of New York Attorney General Letitia James has publicly released a statement that it is now pursuing a criminal rather than a purely civil investigation against the Trump Organization. The investigation is being handled in conjunction with the Manhattan district attorney’s office. The investigations appear to focus on tax and business dealings. While I have challenged claims of a long litany “slam dunk” crimes related to Russia or Ukraine (or even tweets) that legal experts declared regularly on outlets like CNN and MSNBC, I have long opposed Trump’s effort to withhold his tax records and viewed these tax and transactional crimes as the greatest threat for actual prosecution. Tax and fraud cases are easier to prosecute and more difficult to defend in court.
“We have informed the Trump Organization that our investigation into the organization is no longer purely civil in nature. We are now actively investigating the Trump Organization in a criminal capacity, along with the Manhattan DA.”
Investigating a large organization on tax and fraud issues tends to be a target-rich environment. Real estate is an area notorious for the manipulation of assets and their stated worth. Assets are often undervalued to reduce tax exposure or overvalued to secure bank loans. The greatest danger is when the same assets are involved in such reporting controversies.
Investigators have deposed a slew of Trump Organization officials including Eric Trump, the former President’s son, and Chief Financial Officer Allen Weisselberg.
There could also be upcoming privilege fights over demands for information from tax attorney Sheri Dillon.
One objection is that this is selective prosecution. We previously discussed that issue in the context of James’ investigation of the National Rifle Association. James also ran on the pledge to relentlessly pursue Trump and his aides. In this controversy, the Trump counsel is likely to argue that such reporting tactics are common to the real estate field. However, selective prosecution claims are notoriously difficult to argue. Selective prosecution is a sometimes a viable defense when it is used against a group with discriminatory purpose. See United States v. Armstrong, 517 U.S. 456, 116 S. Ct. 1480 (1996), Yick Wo v. Hopkins, 118 U.S. 356 (1886). The key is that the proof of a prosecution “directed so exclusively against a particular class of persons … with a mind so unequal and oppressive” that it violates the guarantee of equal prosecution under the law.
Likewise, malicious prosecution claims are overwhelmingly rejected. This is usually the basis for a civil lawsuit after prevailing in the criminal system. However, it requires an extremely high showing of abuse. In the criminal system, courts tend to disregard arguments based on the motivations of prosecutors. State prosecutors like James are elected and are often motivated by politics. However, courts are focused on whether the underlying allegations would constitute a crime if proven.
As a defense attorney, I would be more focused on cooperative agreements at this stage, particularly with Weisselberg. Tax and fraud cases are comparatively easier to prove than crimes like obstruction but his cooperation could make this a slam dunk. Moreover, he could convert an investigation into the Trump Organization and make it an investigation into Trump himself. The question is whether Trump was or should have been aware of illegality in the reporting of assets.