Trump’s New York Indictment: What’s Missing in the Commentary?

Posted in: Criminal Law

The recent New York grand jury indictment of Donald Trump charges that he falsified business records to carry out a “scheme with others to influence the 2016 presidential election.” The indictment and an accompanying statement of facts, as recounted by District Attorney Alvin Bragg in Manhattan, describe a plan by Trump and others to suppress negative publicity before the 2016 presidential election. Actions alleged include payment in October 2016 of $130,000 to Stephanie Clifford, an adult film actress popularly known as Stormy Daniels.

The charges have spawned a substantial number of legal and political comments. Some analysts urge that the case is strong and well-founded; others see it as weak and misguided. From my perspective, however, much of the commentary overlooks key aspects of the case. That is what this article is about.

The Factual and Procedural Setting

I do not venture as a stranger into observations about Trump and Clifford. Early in 2018, I offered an analysis in Verdict that examined an arbitration and related federal litigation involving both. At the time, the dispute between the two was heating up as Clifford was on the verge of publicly recounting an alleged tryst between her and Trump more than a decade before. This potential disclosure was cited by an attorney who worked for Trump’s business to secure a restraining order against Clifford from a California arbitrator. The restraining order was based on an arbitration provision contained in a non-disclosure agreement (NDA) that Clifford signed in 2016 shortly before the election, and that later was introduced in a court challenge.

The NDA with Clifford memorialized the payment of $130,000 that is presently at issue in the New York indictment. Besides Clifford, identified as Penny Peterson in the NDA, the parties included Essential Consultants LLC (EC), a corporate shell created by Michael Cohen to make the 2016 payment. Cohen was then an attorney who had worked with Trump for many years. Another party to the NDA was David Dennison, the pseudonym for an individual alleged to be Trump. If Dennison signed the NDA, his signature would be found in a confidential side letter attached to the NDA.

Within months of the 2018 arbitration, Cohen was convicted of several crimes pursuant to a plea agreement with federal authorities. The plea covered Cohen lying to Congress and also making an unlawful campaign contribution to Trump in the form of a $130,000 payment. In negotiating the plea, Cohen blamed Trump, although he was not identified by name in the deal with Cohen. Instead, Trump was titled “Individual-1.” Cohen’s about-face in accusing Trump of wrongdoing is an important facet of the recent New York indictment.

The early 2018 restraining order in California was secured by EC, not by Cohen nor by Trump personally. Clifford fought back in court with the assistance of her former counsel, Michael Avenatti. He subsequently had a falling out with Clifford and eventually was convicted of financial crimes. In 2018, before those issues arose, Avenatti filed a lawsuit in state court seeking declaratory relief for Clifford. The filing asserted that arbitration under the NDA was unenforceable because, absent Trump’s signature, a contract had not been formed, and, by its terms, it was an invalid and unlawful agreement.

Clifford’s lawsuit was removed from state to federal court. Trump joined EC in defending against the action, although he did not admit to being a party to the NDA. He also joined EC in moving to compel arbitration.

As the litigation unfolded, I speculated in Verdict about what might come next in the case. Soon after, I wrote a second piece for Verdict suggesting that Trump would be well-advised to admit wrongdoing in making the $130,000 payoff, and offer to pay any related fines and applicable taxes and penalties. I reasoned that Trump should settle the dispute to avoid a worse fate in criminal court down the road. A settlement did not happen, and here we are.

Before and after the indictment was handed down, there has been commentary aplenty. Attention to the case has highlighted the legal charges and potential challenges, among them issues related to the statute of limitations, federal preemption of state law claims, and ambiguity of statutory language. Progressive critics of Trump have wondered whether the indictment is sound. Attention also has been given to political implications; that is, whether the charges will help or hurt Trump in his campaign for reelection as President. It also has been reported that Trump’s reelection campaign has received millions in post-indictment campaign contributions.

In both political and legal analyses, observers have wondered whether other potential criminal cases against Trump that are being considered by the U.S. Department of Justice and the D.A. in Atlanta, Georgia, are of greater seriousness and significance than the payments from long ago that are tied to Trump’s alleged sexual conduct.

In my view, while there is debate in commentary about whether the indictment can or should survive, the reality is that most criminal charges are resolved either by plea agreements or by a trial with a jury or judge. Occasionally, some charges are dismissed before trial by a judge or by an appellate court, but most legal challenges are usually deferred to post-conviction review.

Regardless of the norm, Trump is likely to pursue a strategy of delay hoping to move a trial past the presidential election in November 2024, perhaps believing that if he is reelected he will be protected from prosecution while in office. Leaving aside whether such a strategy would be successful, I assume in this analysis that a trial is in the offing in the next year or so. From that vantage, as detailed below, much is missing in the commentary about the New York indictment.

What’s Missing in the Commentary

1. There is more to the case than a felony charge of election campaign misconduct. The foundation for the New York indictment is business document falsification. This often is charged as a misdemeanor in New York. However, the charge can be elevated to a felony if the defendant intended “…to commit another crime or to aid or conceal the commission thereof.” On this aspect of the case, most commentators have focused on whether Trump intended to influence the 2016 presidential election by making or benefitting from election campaign contributions designed to stifle public knowledge of newsworthy subjects before the vote.

Whether such a charge can be sustained as a matter of state law is not a debate on which this article takes a stance. We know that the U.S. Department of Justice under Attorney General William Barr declined to prosecute Trump for a federal election law violation, although that was a charge against Cohen. For his part, Barr and his aides have been criticized by the former U.S. Attorney in New York with pressuring the office to drop the Cohen case, and to avoid imputations that Trump was involved. In a split vote, the Federal Election Commission (FEC) also declined to act, with Democrats offering a detailed dissent. Curiously, a month later, the FEC approved a large fine against another participant in a plan to thwart publicity unfavorable to the Trump campaign.

These actions aside, we know that the payment to Clifford occurred when Trump’s election effort in October 2016 was reeling from the just released Access Hollywood tape that recorded Trump boasting about his sexual prowess and making disparaging remarks about women. Whether that context will assist in framing a state law prosecution will be contested in a Manhattan trial.

Yet there is more to the case than election campaign charges, as the D.A.’s statement of facts and his post-indictment press comments make clear. Another track pursued by the D.A. is criminal misconduct related to Trump’s taxes. The factual recital refers particularly to payments made to Cohen as reimbursement for funds advanced to Clifford from Cohen’s home equity line of credit. The funds paid by the Trump business were labeled legal expenses based on a retainer agreement, but there was no retainer in place. The factual recital also observes that the reimbursement to Cohen far exceeded the $130,000 payment to Clifford in order to cover potential federal and state income taxes Cohen would pay. An intentional misrepresentation about the funds paid to Cohen, and others, would be a felony under New York law.

Other tax violations are lurking in the facts to be developed by the D.A. even if the law permits Trump to self-fund a political campaign; for example, tax evasion by Trump and by his business if the payments to Cohen were improperly characterized as business expenses and deducted from tax returns. Trump might face exposure as well if he was the source of the amount paid to Clifford, but failed to report the amount on a gift tax return. Any risk that the D.A. might encounter legal obstacles if he relies solely on election campaign misconduct is, in this author’s view, more than offset by potential tax allegations for a jury to consider.

2. There is more to the case than the payment to Clifford. The grand jury indictment provided to D.A Bragg, and the related statement of facts and press conference amplifying the indictment, refer to three different payoffs as part of a “scheme.” According to the indictment, Trump with the aid of others agreed on a plan to “catch and kill” stories that could damage his political campaign if known by the public. As charged in the indictment, Clifford’s payoff was not an isolated event involving her alone, but part of an overarching plan to protect Trump, and, by so doing, undermine election integrity.

As alleged in the indictment, one of the other payments was to Dion Sajudin, a former doorman at Trump’s New York apartment building, who was paid $30,000 in August 2015 not to disclose a second-hand report of an out-of-wedlock child fathered by Trump. Another person, Karen McDougal, a former Playmate for Playboy magazine, is said to have received a payoff of $150,000 to buy her account of an affair with Trump. Trump denies all allegations of sexual or other wrongdoing.

3. There is more to the case than the testimony of Michael Cohen. Yes, Cohen will be a key witness in a future Trump trial. To test Cohen’s credibility, his history as an admitted liar will be subject to aggressive cross-examination. This has been emphasized in news coverage of the case. Still, Cohen is not unlike other witnesses, even murderers, who can be key witnesses in cases against former bosses. Whether Cohen is credited by a jury will depend not only on the internal consistency of his own account and on his motivations, but on whether his testimony is corroborated, at least in part, by the testimony of others.

Of special importance will be the testimony of David Pecker, the former chief executive of American Media Inc. (AMI) and a Trump confidant. AMI avoided prosecution by entering into a non-prosecution agreement in September 2018. As part of the deal, AMI agreed to a factual stipulation spelling out Pecker’s participation in the “catch and kill” strategy to delay and eliminate news stories that would be damaging to Trump, and. D.A. Bragg’s statement of facts offers additional details about personal meetings involving Trump and Pecker, including one with Trump in the White House, that are consistent with Cohen’s account of statutory violations related to the election.

Potentially more problematic for Trump than the testimony of Cohen and Pecker would be the testimony of Allen Weisselberg, formerly the chief financial officer for Trump’s business. Weisselberg previously negotiated a guilty plea to a multi-count indictment of financial misdeeds undertaken for his own financial benefit and for the benefit of other Trump employees and family members. He testified at last year’s Manhattan trial resulting in a conviction of the Trump business for these financial crimes. Weisselberg did not implicate Trump personally, and he received a modest jail sentence in exchange for his plea. However, although that case is over, Weisselberg was not given full immunity from other prosecutions and he faces further exposure, as alleged by D.A. Bragg, for assisting with the payoffs at issue in the current Trump indictment.

How far is Weisselberg willing to go to avoid jail this time around? The judge who confirmed Weisselberg’s negotiated jail sentence after his trial testimony publicly questioned whether a relatively light sentence was appropriate. The same judge is presiding over the Trump indictment. Weisselberg no longer is being paid his salary and legal bills by Trump’s business, as he was prior to his testimony in last year’s trial.

In assessing potential prosecution witnesses against Trump, both Clifford and McDougal might testify. Clifford has stated she had a one-time sexual encounter with Trump in 2006. McDougal’s experience, as she has described it, was frequent and lasted for nearly a year about the same time. Whether each had sexual relations with Trump is not central to the charges against him, but he has made denial of those relationships a key to his defense by attacking the credibility of each woman. If, when, and why either or both are called as witnesses could be a dramatic moment at trial.

Another dramatic moment may come if the prosecution summons Rudy Giuliani, the former mayor of New York and another Trump attorney. It was Giuliani who publicly disclosed in May 2018 that Cohen had been reimbursed for having paid Clifford for her silence. Until then, details of repayment to Cohen had been kept under wraps. Objections to testimony by Giuliani based on attorney-client privilege might be raised by Trump’s counsel, but the privilege would not apply if there is a finding that any privilege held by Trump as a client was waived by consenting to Giuliani’s public comments. In addition, the D.A. may propose that Trump and Giuliani were engaged in criminal fraud, another exception to the privilege.

In terms of evidence available to the prosecution, the D.A.’s statement of facts mentions several emails, text messages, audio recordings, and business documents confirming many of the factual allegations about the dates and times of meetings, transactions, or conversations. To verify the payoffs, it is likely that checks and financial statements will be produced. The introduction of actual documentary proof often has a powerful effect on those hearing evidence.

The statement of facts also mentions in a footnote that the prosecution may offer facts other than those set forth in the statement itself. One possible example concerns the arbitration proceeding initiated in 2018. Once Clifford’s challenge to the arbitration and the restraining order was underway, the progress of the case slowed dramatically and a stay was put in place. In part, the delay was the result of the Cohen investigation by federal authorities, and later, Cohen’s criminal plea. The delay was also related to a separate defamation claim filed by Clifford against Trump that he later sought, successfully, to have dismissed.

As this legal skirmishing unfolded, Clifford’s suit for declaratory relief went nowhere. By September 2018, with Clifford having ignored the restraining order, both Cohen and Trump moved to dismiss the case by promising they would take no further action against her. Indeed, Trump’s filing with the court conceded that, as Clifford had alleged in her lawsuit, a valid contract with an arbitration agreement had not been formed. This concession, which is consistent with a claim that Trump was seeking to cover up wrongdoing by invoking arbitration, is an example of evidence that might see the light of day at trial in New York.

4. There is more to the case than the defense relying on the testimony of Donald Trump. The likely key to Trump’s defense, as in many other criminal proceedings, will be to attack the credibility of witnesses against him in order to raise reasonable doubt about his guilt. Attacks will emphasize that witnesses have been untruthful at times, have made deals with the government, have profited from past relationships with Trump, or have been in past conflict with Trump.

With a focus on the D.A.’s case, defense counsel perhaps can avoid having Trump testify, even if he wishes otherwise, due to concern about the risk of perjury or that he might volunteer statements better left unsaid. And, if Trump does testify, believing that a jury needs to hear him, we can expect rigorous cross-examination about his inconsistent and well-publicized comments in the first half of 2018 regarding payments to Clifford. Examination on this subject may prompt jurors to discredit any other explanation by Trump of what he knew or didn’t know about multiple payoffs and the tax treatment that followed.

Whether or not Trump is a witness, the defense already has advanced a public explanation for his conduct; namely, that his actions were taken, using personal funds, to spare his wife Melania Trump and his family public embarrassment by disclosure of scurrilous charges, even if untrue. But what if his wife and others already knew of the alleged sexual misconduct? A claim that Trump personally believed they did not know about his extra-marital sexual relations could fall flat when set against direct and circumstantial evidence of unlawful intent close to the 2016 election.

To offset this problem, a jury might hear from Melania Trump. Will she be a ready, willing, and convincing witness? What if she already knew in 2016, as a past aide has claimed, that Clifford and McDougal reported having had sex with her husband a decade before? These alleged encounters occurred, in part, when Trump attended a golf tournament while his wife was at home a few months after the birth of their son.

And what about Trump’s adult children, and whether they are ready to stand by him? One of his sons has been identified in the D.A.’s factual summary as having had a role in carrying out the reimbursement of funds to Cohen. Perhaps Trump’s ultimate fallback is that he wanted to save his family further humiliation beyond what they already had suffered. Is having them testify at a trial the way to do that?

5. There is more to the case than a 50-50 chance for the prosecution. The vast majority of criminal defendants in New York are found guilty, mostly by plea agreements and some by trial. Yes, Trump has experienced defense counsel at his side, but the prosecution’s trial lawyers are adept as well. One already was a principal prosecutor in last year’s case against Trump’s business.

6. There is more to the case than the 2016 election. The indictment and the statement of facts deal with the 2016 election campaign and tax violations. But the facts suggest another aspect to the case to the extent that, by early 2018, Trump already was looking ahead to a reelection campaign in 2020. Was he trying to protect himself for that future campaign when he invoked arbitration to enforce the NDA in 2018? And were the legal expenses in pursuing the arbitration lawfully deducted as business expenses in light of Trump’s subsequent concession in federal court that an agreement was never formed?

7. There is more to the case than an inevitable jury trial. Most criminal cases are resolved by plea agreements. That possibility should not be discounted here. Trump has settled cases in the past. For example, the Trump University class action lawsuit for misrepresentations by Trump was settled for nearly full value just days after the 2016 election as a trial approached and Trump was preparing to take office.

Granted, a civil case settlement differs from a criminal case plea agreement given the prospect of incarceration for a conviction. But what would prompt Trump, known for a combative personality, to settle the New York case and enter a plea? Most important, a plea agreement might be the best option if Trump can be assured that a conviction in the New York case, alleging a non-violent crime, would not lead to jail time. While Trump presumably wishes to delay a trial until after the 2024 election, perhaps hoping his reelection will protect him from prosecution, the risk of delaying a trial past the vote depends on the uncertain prospect of several legal challenges and lengthy appellate court review.

Will Trump at some point conclude that it would be better to seek a deal, without a risk of jail time, by pleading guilty to a misdemeanor or even to felony tax law violations, along with payment of fines and penalties? If a plea agreement happened soon, Trump could stay on the campaign trail without the New York indictment hanging over his head, and he could prepare for the possibility of other damaging criminal indictments ahead. With a plea agreement in New York, Trump could still maintain that he engaged in the conduct to save his wife and family further public embarrassment.

What would D.A. Bragg gain by a deal with Trump? Since a jail sentence might be an unlikely result for the prosecution, especially where some experienced commentators have questioned the weakness of the case, the D.A., an elected official, could secure a conviction without the risk of protracted delay and potential appellate review. A conviction through a plea is still a conviction, and a “win” for the prosecution. That, in the end, might be the most important consideration for New York authorities.

Posted in: Criminal Law

Tags: Donald Trump, New York

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