Twenty-five years ago, the Justice Department prosecuted the owners of a company in San Diego that had sold almost 2 million pounds of strawberries containing hepatitis A to the U.S. Department of Agriculture’s school lunch program. The strawberries sickened at least 198 students and teachers. The evidence in that fraud case was easy to understand: A search warrant executed on the company’s headquarters turned up two “smoking gun” letters: one to the USDA certifying that all of its strawberries were grown in the United States, and another written the same day to a Mexican company ordering more strawberries grown in Mexico. The owners of the company quickly pleaded guilty.
Witnesses can be dramatic, but their testimony can quickly wither when subjected to good cross-examination.
Documents are a fraud prosecutor’s best friend. Witnesses can be dramatic, but their testimony can quickly wither when subjected to good cross-examination. There isn’t much a defense attorney can do to take the sting out of a damning document, however.
On Tuesday, New York State Office of the Attorney General’s filed a court petition as part of its ongoing civil investigation into Donald Trump and the Trump Organization’s alleged financial misdeeds. Those misdeeds, according to investigators, include tax evasion and false statements to banks and insurance companies.
The allegations are not hard to understand: Attorney General Letitia James’ petition describes why her office believes the Trump Organization consistently overstated the values of its properties, usually by tens of millions of dollars, for purposes of fraudulently obtaining bank loans, meeting insurance requirements, and taking larger deductions on its tax returns.
The attorney general’s petition also calls for Trump, and his children Ivanka and Donald Jr., to give deposition testimony, but James doesn’t have any real expectation that the depositions will bear fruit; son Eric Trump has already refused to answer questions in James’ civil investigation, invoking his Fifth Amendment right against self-incrimination. The part of the petition more likely to yield useful information is the request for documents, in which James lays out the foot-dragging, noncompliance and stubborn refusal of Trump and his companies to comply with the various subpoenas and court orders demanding production of documents, including emails and other internal communications.
We’ve seen this show before. It took the Manhattan District Attorney’s Office two years, and two trips to the U.S. Supreme Court, to finally obtain Trump’s and the Trump Organization’s tax returns and underlying documents from its accounting firm, Mazars USA LLC. The DA’s efforts were stalled by multiple objections filed by Trump and his companies. To date, although the Trump Organization was criminally charged last July by the Manhattan DA for giving untaxed, off-the-books benefits to employees, Trump himself has successfully avoided any legal liability — unlike such underlings as Michael Cohen, his former attorney.
But all that may soon change. The greatest value of James’ investigation may not be civil charges — which, because it’s a civil case, would at most entail a financial penalty — but the documents that James’ attorneys are persistently shaking out of the Trump tree. Her office is methodically pressing the investigation’s targets — which include not only Trump and his companies but also a well-regarded national law firm, a large accounting firm and Ivanka and Donald Trump Jr. — into producing hundreds of thousands of documents that apparently haven’t been produced in other investigations.
Thus, despite no charges (yet), the attorney general’s office is doing a lot of things right. It has cross-referenced documents produced by other subpoenaed parties to show the court that Trump himself has failed to produce documents that are clearly in his possession. In contrast to the more than 900,000 documents James’ office has received so far from the Trump Organization, Trump has produced only three of his own documents.
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The attorney general’s office has also kept the pressure on, negotiating an agreement with the Trump Organization to “toll,” or pause, the civil statute of limitations for eight months, giving James additional time to investigate. She has obtained voicemails from Trump’s tax attorney preserved on a real estate company’s server — a potential source of evidence often overlooked by investigators. And, pursuant to an agreement with James’ office, the Trump Organization in December hired a firm with expertise in electronic discovery, ensuring a higher quality search and production of computer records. Now that the attorney general’s office is getting these documents, it’s likely the evidence will eventually find its way into the hands of criminal prosecutors.
Whether those criminal prosecutors will ultimately bring a large financial fraud case against Trump and his companies is uncertain, because relevant documents have been withheld from investigators for so long. Despite the existence of ample probable cause, no criminal investigative agency has gone down the fraught path of executing a search warrant on the home and office of the former president of the United States. (Search warrants are criminal investigative tools; James’ office, which is at present conducting a civil investigation, is limited to using subpoenas).
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That’s a courtesy apparently still enjoyed by the former chief executive. And it’s making bringing a case against Trump and the Trump Organization more difficult, because in financial fraud cases, it’s usually the documents that tell the whole story — but only if you can get your hands on them.
