Donald Trump

Prosecutors Are Still Hazy About What Crime Trump Was Trying To Conceal by Falsifying Business Records

The continuing ambiguity reflects the legal challenges that Manhattan District Attorney Alvin Bragg faces in transforming one hush payment into 34 felonies.

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To treat Donald Trump's alleged falsification of business records as a felony, Manhattan prosecutors must identify "another crime" that he was trying to conceal or commit. But the indictment that was unsealed yesterday, which charges the former president with 34 felonies, is vague on that point. So is Manhattan District Attorney Alvin Bragg, who alluded to several possibilities in public statements on Tuesday.

That continuing ambiguity is striking, because the district attorney's office has been mulling charges like these against Trump for years. The idea was internally dubbed the "zombie case," because it kept coming back to life no matter how many times prosecutors working for Bragg's predecessor expressed skepticism about its viability. Yet here we are, nearly seven years after the hush payment at the center of the case, and Bragg still won't say precisely why he is charging falsification of business records, ordinarily a misdemeanor, as a felony.

Less than two weeks before the 2016 presidential election, Trump lawyer Michael Cohen paid porn star Stormy Daniels $130,000 to keep her story about a 2006 affair with Trump out of the press. Federal prosecutors viewed that payment as an excessive campaign contribution, and Cohen accepted that characterization in a 2018 guilty plea. Trump reimbursed Cohen with a series of checks in 2017. According to the federal sentencing memorandum in Cohen's case, the Trump Organization misrepresented those checks as payment for legal services under a nonexistent retainer agreement.

The New York indictment counts each of those checks, along with each invoice and ledger entry related to them, as a distinct felony. According to the indictment, that's because each record was created "with intent to defraud and intent to commit another crime and aid and conceal the commission thereof." But the indictment does not say what the other crime was.

The "statement of facts" accompanying the indictment notes Cohen's guilty plea, which suggests that "another crime" refers to his violation of federal election law. But it's not clear that a federal offense counts as "another crime" under the New York law dealing with falsification of business records, which is one reason that Manhattan prosecutors previously were leery of pursuing charges against Trump.

The statement of facts also says the hush money scheme "violated election laws." It does not say which election laws. But in a press release on Tuesday, Bragg said the "criminal activity" that Trump sought to "conceal" included "attempts to violate state and federal election laws" (emphasis added). In comments to reporters, Bragg mentioned one possibly relevant New York statute: Section 17-152 of the state's election law.

That provision says "any two or more persons who conspire to promote or
prevent the election of any person to a public office by unlawful means and which conspiracy is acted upon by one or more of the parties thereto, shall be guilty of a misdemeanor." Assuming that "unlawful means" includes a violation of federal limits on campaign contributions, the money that Cohen says he gave Daniels at Trump's behest might qualify as a violation of Section 17-152.

Still, it's not clear why Bragg describes that offense and the federal crime underlying it as "attempts to violate state and federal election laws." If Cohen made an illegal campaign contribution, he did not merely attempt to violate federal law; he succeeded in doing so. Likewise, if he and Trump conspired to promote Trump's election "by unlawful means" and "acted upon" that plan, the crime was completed and not merely attempted.

The statement of facts hints at yet another possible candidate for "another crime." It says Trump and Cohen "took steps that mischaracterized, for tax purposes, the true nature of the payments made in furtherance of the scheme" (emphasis added). That requires some explaining.

According to the statement of facts, Trump paid Cohen a total of $420,000, which included the $130,000 hush money reimbursement and "a $50,000 payment for another expense." Trump Organization CFO Allen Weisselberg "then doubled that amount to $360,000 so that [Cohen] could characterize the payment as income on his tax returns, instead of a reimbursement, and [Cohen] would be left with $180,000 after paying approximately 50% in income taxes."

Under New York law, filing a false statement "with intent to defraud the state or any political subdivision" is a Class E felony. But if Cohen mischaracterized a reimbursement as income on state or city tax forms, that would be a peculiar sort of fraud, since the effect would be to increase his tax liability.

At his press conference yesterday, Bragg again mentioned the tax angle, but he did not explicitly say he was relying on it to turn Trump's falsification of business records into a felony. "His wording was ambiguous in places," The New York Times notes. "At one point, he seemed to suggest that a planned false statement to New York tax authorities was just an example of the ways by which Mr. Trump and Mr. Cohen purportedly violated the state law against conspiring to promote a candidate through unlawful means."

The indictment says Trump falsified records not only to "conceal" another crime, which could refer to an election law violation that had already occurred, but also with "intent to commit another crime," which could refer to future tax returns filed by Cohen. Does Bragg have in mind two or more underlying crimes? If so, what are they? "The indictment doesn't specify them because the law does not so require," Bragg told reporters.

Karen Friedman Agnifilo, a former Manhattan chief assistant district attorney, and Norman Eisen, a senior fellow at the Brookings Institution, are not troubled by Bragg's reticence. "In an abundance of caution," they write in a New York Times essay, Bragg "not only alleges violations of state campaign finance law but also alleges federal violations. We believe that is permitted, given that the fraudulent books and records and other relevant statutes refer simply to covering up 'another crime' or using 'unlawful means' and do not specify whether they need be federal or state."

Agnifilo and Eisen argue that Bragg has a "strong" case against Trump, even if the details remain hazy. They note that "the creation of phony documentation to cover up campaign finance violations has been repeatedly prosecuted in New York," although none of those cases involved federal candidates.

Other legal observers have a different take. "Based on what I have seen so far," writes Richard L. Hasen, a UCLA election law expert, "the decision to charge Donald Trump with felonies in New York state is a mistake both legally and politically."

Cohen said he paid Daniels at Trump's behest, which implied that Trump had solicited and accepted an illegal campaign contribution. Although Hasen thought that charge was supported by the evidence, he notes that the Justice Department never pursued it, "perhaps because of political interference from Trump's then-attorney general, Bill Barr." But even after Trump left office and Merrick Garland replaced Barr as attorney general, federal prosecutors conspicuously declined to charge Trump in connection with the hush payment.

"The federal case would not have been a slam dunk, because there were big legal and factual issues," Hasen says. "Legally, some have argued that these payments were personal expenses, not campaign expenses, even if shutting Daniels up would have helped Trump politically, too. Factually, to turn a campaign finance violation into a criminal one, prosecutors would have to prove that Trump knew he was violating campaign finance laws and did so willfully. Proving intent can always be tricky. Just ask those who (unsuccessfully) prosecuted former Senator John Edwards."

Edwards was accused of accepting several hundred thousand dollars in illegal campaign contributions from a wealthy supporter. Edwards used the money to hide an extramarital affair and the baby that resulted from it. Federal prosecutors argued that his intent was to avoid a scandal that would have compromised his campaign for his party's 2008 presidential nomination. Edwards argued that covering his mistress's living expenses was a personal expenditure aimed at deceiving his wife, who was dying from cancer at the time. Jurors evidently saw that explanation as plausible, because they acquitted Edwards of one charge while deadlocking on five others.

In addition to the obstacles that federal prosecutors would have faced if they had pursued a case against Trump, Hasen says, Bragg's case "has new, more serious ones." In particular, "it is far from clear that Trump could be liable for state campaign finance crimes as a federal candidate." Hasen adds that "state prosecutors may be precluded from prosecuting federal candidates for federal crimes under a rule called 'preemption,' meaning [charges] have to be brought by federal authorities rather than state authorities." Those "thorny issues," he says, "likely will have to be resolved by appeals courts over years."

Robert Kelner, an election law specialist at Covington & Burling, is similarly skeptical. "The local prosecutors seem to be relying in part on a bank shot exploiting Michael Cohen's guilty plea in a federal campaign finance case," he told the Times. "But there were serious questions about the legal basis for the case against Cohen, making that a dubious foundation for a case against a former president. Prosecutors also allude vaguely to 'steps' taken to violate tax laws, but they say little to establish what that might mean."

Legal questions aside, the moral basis for this prosecution is weak. The transaction with Daniels, while tawdry, was consensual. Likewise Cohen's fronting of the money and Trump's reimbursement. There was nothing inherently criminal about any of this. The payment was illegal only if it is construed as a campaign contribution, a questionable proposition that Cohen himself accepted only when confronted by a litany of related and unrelated charges that could have sent him to prison for decades instead of the three-year sentence he ultimately received. But even if you accept that contentious interpretation of federal election law, the question remains: Who was victimized by the hush payment?

Bragg thinks voters suffered, because they were deprived of information that might have influenced their choice between Trump and Hillary Clinton. Yet Trump had a long, widely familiar record of extramarital affairs, and it seems unlikely that yet another one would have swayed voters who were otherwise inclined to support him. And if Trump had used campaign money to directly pay off Daniels rather than using personal funds to reimburse Cohen, as the government's theory in the case against Cohen suggests he should have, the result would have been the same: Daniels would have kept quiet for the time being, and any scandal would have been postponed until after the election.

It is likewise hard to figure out whose rights were violated by Trump's misrepresentation of the money he paid to Cohen. New York's business records law requires an "intent to defraud," which in common parlance would mean that Trump used deceit to rip someone off.

Some of Bragg's critics say that element "requires proving that the scheme resulted in cheating or depriving another person of property or a thing of value or a right and that there is no such evidence here," Agnifilo and Eisen write. "That may be the case in other jurisdictions, but in New York, there is no such requirement. New York appellate courts have held in a long series of cases that intent to defraud includes circumstances in which a defendant acts 'for the purpose of frustrating the state's power' to 'faithfully carry out its own law.'"

The victim, in other words, was the government, which had an interest in prosecuting debatable violations of state election law that hinge on debatable interpretations of federal law. It is hard to muster much indignation at that injury, let alone enough to support 34 felony charges. The elevation and multiplication of charges, combined with Bragg's belated reassessment of the case's legal merits, reinforce the suspicion that the prosecution is politically motivated.

As Reason's J.D. Tuccille notes, other potential cases against Trump involve much more serious charges, including solicitation of election fraud in Georgia and his broader scheme to stop Joe Biden from taking office. By bringing a case involving relatively minor misconduct and "tendentious interpretations of law," Tuccille warns, "Bragg and company could delegitimize the legal process and invite retaliation from Republicans when they have the opportunity to return the favor."

Hasen has similar concerns. "This kind of case can give credence to Trump claims of a witch hunt," he writes. "It is very easy to see this case tossed for legal insufficiency or tied up in the courts well past the 2024 election before it might ever go to trial. It will be a circus that will embolden Trump, especially if he walks."