The Manhattan D.A.’s Trump-Organization Case Ends with a Whimper By Dan McLaughlin
Allan Weisselberg, the 75-year-old former chief financial officer for the Trump Organization, is pleading guilty to the fairly piddling tax-fraud charges on which he was indicted by the office of Manhattan district attorney Alvin Bragg last July. The case was always obviously not about Weisselberg or the accused crime, but about showing some progress against Donald Trump and either (1) obtaining Weisselberg’s cooperation against Trump or (2) punishing him for not cooperating. Under the plea deal, Weisselberg is likely to spend only a few months in prison, and he will not cooperate.
What does this all mean? For Bragg, it likely means that his office is closing up shop on an overreaching, overzealous, overpriced witch-hunt of an investigation, and putting his resources to some better use. Some diehard enthusiasts of the perennial “walls are closing in on Trump” narrative note that Weisselberg may now be unable to invoke his Fifth Amendment privilege against testifying, but how far does that get anyone? If Weisselberg were questioned about matters other than the small-beer tax issues he’s pleading to, he could still invoke the privilege unless granted immunity — but then, he could have been given immunity a long time ago if he was seen as an enthusiastic cooperator. The most that is likely to be accomplished would be to compel him to testify in the civil proceeding pursued by the New York attorney general’s office, but the exposure in that case does not present a realistic path to sending Trump to prison or making it impossible for him to run for office again. Anything else is noise; voters already assume that Trump is the kind of guy who cuts every corner on his taxes and in his business accounting that he can get away with. And Weisselberg is highly unlikely to be in position to incriminate Trump on anything bearing on the 2020 election or January 6.
Yet again: Maybe the legal system can finally find a silver bullet against Trump. But it still does not look that likely.
Let’s review why the collapse of the Manhattan D.A.’s case was inevitable. In March, the New York Times published the resignation letter from special assistant D.A. Mark Pomerantz to Bragg arguing for prosecuting Trump. As Charlie Cooke explained at the time, it is shameful in our system of justice to have a prosecutor do this kind of hit-and-run public argument where he accuses someone of a crime without even detailing the charges or walking through the supporting evidence, let alone making his case to a jury of the defendant’s peers. But taking the letter at face value, here is what Pomerantz said:
I believe that Donald Trump is guilty of numerous felony violations of the Penal Law in connection with the preparation and use of his annual Statements of Financial Condition. His financial statements were false, and he has a long history of fabricating information relating to his personal finances and lying about his assets to banks, the national media, counterparties, and many others, including the American people.
The fact that Pomerantz had to throw in references to Trump lying to “the national media” and “the American people” only increases the odor around the letter of a man who has decided his target is guilty of something, and is grasping for a law to hang it on. Moreover, no particular crimes were mentioned. That, in itself, made it hard for the rest of us to pin down exactly what Pomerantz was accusing Trump of.
The problem was always: Who’s the victim? Because the Trump Organization is not a public company, there are no shareholders to defraud. Based on prior reporting, it appears that Pomerantz originally wanted to charge Trump with defrauding his lenders, but the charge couldn’t be proven because the lenders did not actually lose money on the loans. Moreover, Trump’s lenders were big, sophisticated banks who knew perfectly well with whom they were dealing and what kind of grains of salt to apply to his valuations of his own properties. And in most false-statements cases, even if it is not required by the law in question to show that somebody relied on your lies and suffered damage from acting on them, it is at least necessary to show materiality — i.e., that these were the kinds of lies that are likely to deceive a reasonable person who knows all the surrounding available facts.
In my old area of practice, securities fraud, there is a doctrine called “bespeaks caution,” which more or less means that it’s hard to prove that false statements about an investment were material if the offering materials gave you enough warnings that you could figure out on your own what kind of risks the business faced. One of the leading cases on the doctrine is In re Donald J. Trump Casino Securities Litigation, a federal case filed in New Jersey by investors in the Trump Taj Mahal casino in the early 1990s. The courts concluded that Trump’s investors were given enough warning to assess the risks in investing in his casinos in a weakening economy. The courts also concluded that it didn’t matter if Trump puffed up the valuation of his own wealth because he only promised to make a limited investment of his own money in the Taj Mahal, and he made that investment. Sound familiar?
In order to select a more “victimless” crime than lying to the lenders, the Manhattan prosecutors refocused on “falsifying business records” charges, set forth in section 175 of the New York Penal Law. But that would have required playing fast and loose with the law. Pomerantz referred to felonies, so we must set aside the misdemeanor violations such as Section 175.45 (issuing a false financial statement) and Section 175.05 (falsifying business records in the second degree). That leaves us with Section 175.10 (falsifying business records in the first degree), which I will quote here to include its reference to the second degree misdemeanor offense:
A person is guilty of falsifying business records in the first degree when he commits the crime of falsifying business records in the second degree, and when his intent to defraud includes an intent to commit another crime or to aid or conceal the commission thereof.
A person is guilty of falsifying business records in the second degree when, with intent to defraud, he:
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Makes or causes a false entry in the business records of an enterprise; or
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Alters, erases, obliterates, deletes, removes or destroys a true entry in the business records of an enterprise; or
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Omits to make a true entry in the business records of an enterprise in violation of a duty to do so which he knows to be imposed upon him by law or by the nature of his position; or
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Prevents the making of a true entry or causes the omission thereof in the business records of an enterprise. [Emphasis added.]
As you will immediately notice, the crime still requires “intent to defraud.” It also requires “an intent to commit another crime or to aid or conceal the commission thereof.” In other words, you can’t just prove this charge without also showing a scheme to commit some other crime. What other crime? It wasn’t defrauding the lenders, because if they’d had the evidence to charge that, they would have. It can’t just be “conspiracy,” because a conspiracy also requires people coming together to agree to commit some independent crime, and then you’re back where you started. And you have to show not only that the documents contained false records, but, again, that those falsehoods were material — as the New York courts have defined the term:
The false statement or information must be material to the written instrument in which it is contained. There must be a sufficient nexus between that which the complete instrument is intended to accomplish and those portions of it which are not accurate. The inaccurate facts or statements must be such as will determine the effectiveness of the whole writing or go to the integrity of the entire instrument. It must reasonably appear that the erroneous information will cause, influence or determine a result that would not otherwise occur. People v. Altman, (Nassau Cty Ct. 1975).
That means that the false statement had to be aimed at deceiving someone in particular, to accomplish some end. One court dismissed charges under this statute that a call-girl ring put deceptive entries on charges to American Express (e.g., listing the payment for a prostitute as a “limo” charge), because the lies were not intended to deceive American Express:
The defendants did not intend for American Express to be deceived by the writing. They knew and expected that the particular falsity of this writing would be of no moment to American Express. It was only the spouse or other personal or business associates of the defendants’ customer who were apparently the intentional targets of the defendants’ deceit. . . . [In cases where the statute has been applied,] the false form submitted was either intended to deprive the recipient of a benefit it was to receive from the form, imposed a detriment on the recipient which the truthful submission of the form was intended to prevent, or eviscerated the efficacy of the form itself. Here the only alleged detriment visited on American Express was compelling it to deal with escort services which it purportedly would otherwise vigorously avoid. People v. Keller, (Sup. Ct. N.Y. Cty. 1998).
In other words, even though the false-statement statute doesn’t require harm to any other person, it isn’t really a silver bullet to allow prosecution of a completely victimless falsehood. But the closest thing the investigation ever unearthed to a victim was the tax authorities — hence, the charges stemming from improper tax treatment for Weisselberg’s employment perks. But without Weisselberg’s cooperation, how could they hope to prove Trump’s personal, knowing complicity? Trump would undoubtedly have had some personal involvement in the overall valuation of his properties, but in the tax treatment of perks paid to the guy whose job involved overseeing the organization’s taxes?
Let the crime be unambiguous, let it be one that is regularly prosecuted and not winked-at when committed by Democrats, and let the evidence be clear, and I will eagerly support a criminal prosecution of Donald Trump. But if prosecutors keep chasing theories they wouldn’t use against their own friends and allies, the reek of unequal justice will be overpowering. The Manhattan district attorney appears to have recognized the stench and given up chasing Trump.
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