As the Mueller Investigation Closes, New York Investigations Shift into High Gear

On Friday March 21, 2019, the investigation by Special Counsel Robert Mueller came to a close when he delivered his final report to Attorney General William Barr. Two days later, Barr informed Congress via a four page letter that Special Counsel Robert Mueller did not find a conspiracy between the Trump 2016 campaign and the Russia government to interfere in the 2016 election, and that Barr concluded the President had not obstructed justice.

While national leaders debate the conclusion of Robert Mueller’s investigation, and the timing of the release of the underlying report, the State of New York’s investigations into the Trump Organization have picked up steam.

As I write about in my forthcoming book Political Brands, state prosecutors are following up on allegations of wrongdoing made by Michael Cohen, President Donald Trump’s former lawyer, in public congressional testimony.  For example, Cohen stated in his written testimony, “It was my experience that Mr. Trump inflated his total assets when it served his purposes, such as trying to be listed among the wealthiest people in Forbes, and deflated his assets to reduce his real estate taxes.” As Cohen explained during his live testimony, Trump allegedly inflated his assets when he was seeking a loan from Deutsche Bank to purchase the Buffalo Bills.

Lying to get on a Forbes list of billionaires is not a crime. But lying to a bank to get a huge loan could be a financial crime under both federal and state statutes.

So far the New York Times has reported that New York Attorney General Tish James has opened a civil investigation and has subpoenaed Deutsche Bank — a Trump lender — to provide her office with “loan applications, mortgages, lines of credit and other financing transactions in connection with the Trump International Hotel in Washington; the Trump National Doral outside Miami; and the Trump International Hotel and Tower in Chicago…”  Depending on what’s in the bank’s papers, this flurry of activity could be the predicate of a criminal investigation into how the Trump Organization conducted business.

Meanwhile, as I outlined in my last post, the New York Attorney General was also at the forefront of investigating the Donald J. Trump Foundation for malfeasance including being used to inappropriately pay commercial debts and illegally used during the Trump 2016 campaign, where foundations are not allowed to participate.

The NYAG sued to have the Foundation closed in June 2018. In November 2018, a judge agreed that it was appropriate for the NYAG to bring this suit even though it named the sitting president as one of the defendants, along with Trump’s three adult children, Ivanka, Eric and Don Jr. (Trump had asked the suit to close the foundation to be dismissed; this order from the judge citing Clinton v. Jones refused to do so).

In December 2018, the Trump Foundation signed a stipulation with the New York Attorney General agreeing to dissolve the charity under judicial supervision. Thus, the remaining money in the Foundation will be distributed for actual charitable purposes. It isn’t clear what the authorities will do with the Foundation’s painted portrait of Trump that was at the center of the allegations of malfeasance.

One thing that remains unresolved is whether the judge will grant the NYAG’s original request to bar the president and his adult children from running charities in New York.

Another open matter is referrals to federal law enforcement. The NYAG “sent referral letters to the Internal Revenue Service and the Federal Election Commission, identifying possible violations of federal law for further investigation and legal action by those federal agencies.” Whether the IRS or the FEC will do anything about the Foundation’s alleged violations of law is unknown at this time. And while the Foundation matter may merely be resolved as a civil matter, it is still possible that New York State could peruse the Foundation criminally as well.

State investigations into the Trump orbit continue apace without threat of presidential interference because of the American system of federalism. Trump cannot stop or control investigations into state crimes, nor can he pardon state crimes.

As James Madison wrote in Federalist 51, “ambition must be made to counteract ambition,” in describing checks and balances in the United States government. One of those checks is that in the federal government each of the three co-equal branches will guard against the expansion of power of the others. But this check and balance is also at work between the federal government and the fifty states. The ambitions of the states and their attorneys general are an additional check on the ambitions of the president. The lack of pardon power over state crimes is particularly important. While the President Trump could seek to pardon away federal crimes that touched close to him or his inner circle, he simply cannot pardon a state crime no matter who committed it—whether that’s himself or his kids.

Image: Trump Tower stands on Fifth Avenue in Manhattan on August 24, 2018 in New York City. (Photo by Spencer Platt/Getty Images)

 

About the Author(s)

Ciara Torres-Spelliscy

Leroy Highbaugh Sr. Research Chair and Professor of Law at Stetson University College of Law and Brennan Center Fellow at the the Brennan Center for Justice at NYU School of Law - Follow her on Twitter (@ProfCiara).