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Davis: Supreme Court decision is bad news for Trump, good news for Vance
It's easy to forget that, despite President Trump believing he is immune from federal prosecution no matter what he does as president, based on a 1973 Justice Department memo, he is not immune from New York state law criminal prosecution even while he is president. Many people, including maybe Trump, have forgotten that distinction.
The U.S. Supreme Court humiliated Trump and his lawyers by unanimously rejecting (by 9-0) the Trump team's extreme view that, as president, Trump "absolutely immune" from any subpoena and, therefore, is above the law. Trump's lawyer Jay Sekulow may have claimed victory - I know what spin is, believe me - but everyone knows Trump lost on the key issue - unanimously.
In addition, by a 7-2 vote, including two Trump appointees, the High Court allowed a federal or state grand jury subpoena to be enforced against Trump while he is president to obtain documents potentially relevant to a criminal investigation. The Court in its wording all but guaranteed that Manhattan District Attorney Cyrus Vance, Jr. will at some point be getting Trump's personal and company federal and New York state tax returns. And Trump's criminal exposure goes far beyond just criminal fraud under New York state tax law.
I know the extent of his exposure through my representation of Trump's 10-year attorney, Michael Cohen, who probably knows more about Trump and his business dealings during his 10 years of working as an attorney for Trump and his company. He probably knows a lot more than his family about all the personal issues.
I was present when senior prosecutors from Vance's office interviewed Cohen several times in 2019 at the federal satellite correctional facility in Otisville, N.Y. I cannot disclose the details of those interviews. But I can remind everyone about the multiple specific Trump crimes, documented through televised exhibits, by Cohen during his sworn, public testimony before the House Oversight Committee on Feb. 27, 2018. See his opening statement here.
First, there are the two checks made out to Cohen of $35,000 each, signed by Trump personally from his own checking account, dated March and August 2017 - i.e., when he was president. They were put up on TV screens before the House committee and an audience of tens of millions of TV views in America and around the world. See here. Exhibit 5a.
I have always been amazed that during the hearing, not one Republican on the House Oversight Committee - not one - asked Cohen a single question about these personal checks signed by a sitting president to implement a criminal hush money scheme already found as such by federal prosecutors.
Can you imagine if the situations were reversed and it was President Obama or Clinton writing such personal checks while they were president, that the hyper-partisan, shirt-sleeved Rep. Jim Jordan (R-Ohio) silent if it were a Democratic president who wrote those checks?
Cohen also received in 2019 additional 8-9 $35,000 monthly checks from the Trump Organization Trust Fund, established after Trump became president. These checks were co-signed by the Trust's two trustees, Trump's son, Donald Trump Jr., and Allen Weisselberg, the company's chief financial officer, from that Trump Company Trust Fund, established under New York law with the proviso it could not be used to benefit Trump personally - obviously violated here. See these two checks displayed at the House hearing, here, Exhibit 5b.
Another question: Both Trump Jr. and Weisselberg were not covered by the 1973 memo immunizing a sitting president. I often wondered why federal prosecutors did not indict them (although Weisselberg, for reasons never explained, was given immunity prior to Cohen's guilty plea, but that should not have applied to his future crimes.) In any event, there is nothing to stop Vance from indicting both of them for implementing a criminal conspiracy.
These monthly $35,000 checks paid to Cohen by Trump, his son and his CFO Weisselberg were described by his own attorney, Rudy Giuliani, to the media as "reimbursements" for the $130,000 Cohen advanced to pay off Stephanie Clifford, a.k.a. Stormy Daniels. She had threatened to reveal her sexual affair with Trump a few days prior to the election unless she was paid this amount, negotiated with Cohen by her lawyer. Trump insisted that Cohen advance the money, with a promise of reimbursement, to hide his connections to the cover-up scheme - in itself, a criminal obstruction of justice. Federal prosecutors found that close proximity to the election as well as other evidence to prove Trump had "political purposes" and tried to cover up the payment - thus making Cohen's payment at Trump's "direction" illegal.
If Trump or his company treated these reimbursement checks to Cohen as business tax deductions on their New York state tax returns, that would be criminal. They are hush money payments, not justifiable tax-deductible business expenses. Thus, under the Supreme Court decision, there are more than enough factual predicates to enforce a grand jury subpoena to force Trump to give up his and his company's tax returns -- whether he is still president or after.
Cohen also displayed several Trump financial statements during the hearing. He stated in sworn testimony that he knew from personal knowledge that Trump sometimes artificially inflated his assets in order to obtain a larger bank loan. Then, when it came time to paying property taxes, such as regarding his owned New York golf course, Trump caused the value of the golf course property to be reduced (on the same financial statement previously used for banks) downward in order to reduce his state property taxes. See exhibits displayed by Cohen regarding these uses of fraudulent bank statements here. See Ex. 1a-c. Also, reports of Trump reducing property valuation of his owned golf course to reduce property taxes, see here, Ex. 2.
These documents also are solid predicates, consistent with the high court decision, to allow Vance to support subpoenas not only to obtain tax returns but also all financial statements used by Trump for various fraudulent purposes.
Another example (among many others) was Cohen's eyewitness testimony that Trump used a phony bidder to inflate the price of a portrait of himself at an art auction (to avoid an embarrassingly low bid price). The phony bidder was secretly reimbursed by Trump or his company for the inflated bid price. See here. Ex. 3.
But, again, if Trump or his organization classified this payment to the bogus bidder as a business expense on their New York state tax return, then the grand jury subpoena for Trump's and the company's tax returns must be honored, according to the Supreme Court, even while Trump is president. Plus, the use of the phony bidder could be a criminal commercial fraud offense.
Bottom line: Thanks to the hard evidence Cohen provided (and other evidence I assume Vance's team has independently obtained), there is a good chance that Trump will be indicted for a variety of New York state crimes. And if and when there is a criminal trial of Trump, all his tax returns and relevant financial statements will be made public.
It is unlikely this will happen before the November elections. But so what? Even Trump voters know and cannot deny: The reason why Trump has fought so hard against release of his tax returns is that - surprise! - he has something to hide.
And on Jan. 20, 2021, if and when the new president, Joe Biden is sworn in, Trump may have something to fear more than exposure of his tax returns: Handcuffs and jail time.
Davis served as special counsel to President Bill Clinton and a member of President Bush's Privacy and Civil Liberties Oversight Board. He is co-founder of the law firm of Davis Goldberg & Galper and the strategic media and crisis management firm Trident DMG. He authored "Crisis Tales: Five Rules for Coping with Crises in Business, Politics and Life" (Scribner 2018). Davis can be followed on Twitter @LannyDavis.