High Court Set to Hear Historic Trump Financial Records Cases

The president’s tax returns have been the target of Democrats ever since he refused to release them during the 2016 campaign.  

The U.S. Supreme Court. (Courthouse News photo/Jack Rodgers)

WASHINGTON (CN) — In a pair of cases that test the limits of presidential privileges and the relationship between the executive and legislative branches, the Supreme Court will hear arguments Tuesday over whether House Democrats and a New York prosecutor can subpoena President Donald Trump’s financial records and tax returns.

The cases concern subpoenas that seek various financial documents related to Trump, members of his family and his businesses. The court will hear remote telephone arguments in the cases across two hours Tuesday morning, with the disputes concerning the congressional subpoenas combined into one argument and the fight over the New York prosecutor’s probe in a separate block.

The high-profile fights have been destined for Supreme Court resolution since the first of the subpoenas went out last spring and are among the most closely watched and politically charged cases the court will hear this term.

As in many cases heard by the court with a 5-4 Republican-appointed majority, Chief Justice John Roberts is considered likely to be a swing vote in the case.

Erwin Chemerinsky, dean of the University of California Berkeley Law School, said Roberts, who has a reputation for being concerned with how the Supreme Court is viewed as an institution, might consider the optics of how the cases come out.

“I would think here Roberts, if he cares about the institution, would be very reluctant to see a 5-4 with the five Republican nominees ruling in favor of Trump,” Chemerinsky said.

Congressional Subpoenas                                                   

Chemerinsky said the case over the validity of subpoenas from three congressional panels will have significant ramifications for the relationship between the executive and legislative branches.

The justices of the U.S. Supreme Court gather for a formal group portrait in November 2018/ (AP Photo/J. Scott Applewhite, File)

“If the Trump administration wins, it will be a tremendous limit on Congress’ investigative power relative to whoever is president,” Chemerinsky said in an interview.

The first subpoena comes from the House Oversight Committee, which requested eight years of financial and accounting records for Trump and his businesses from Mazars, Trump’s longtime accounting firm. 

In justifying its subpoena, the House Oversight Committee said it was evaluating the adequacy of government ethics and financial disclosure laws.

Trump filed suit in Washington, D.C., federal court to block the subpoena, but a federal judge sided with the committee in finding the request valid. The D.C. Circuit affirmed in October, holding the committee had a valid legislative purpose for requesting the documents.

Separately, the House Financial Services and House Intelligence Committees sent virtually identical subpoenas to Deutsche Bank and Capital One seeking years of financial information from Trump, his companies and members of his family.

The House panels said their subpoenas were part of broad investigations into Russian interference in the 2016 election, money laundering and unsafe lending practices.

Trump likewise sued to block their subpoenas in New York federal court. In May 2019, the court denied an injunction and the Second Circuit affirmed the decision last December.  

House Democrats have intervened in the cases to defend their requests.

In opposing the subpoenas, Trump argues Supreme Court precedent and the structure of the Constitution requires Congress to have a valid legislative purpose to issue subpoenas. Casting comments from House Democrats about the subpoenas as part of broader attempts to investigate alleged Trump wrongdoing, the president’s attorneys say there is no valid legislation that could come from the subpoenas.

Trump further argues House rules do not explicitly allow for subpoenas like the committee sent and that allowing the requests “would fundamentally alter the balance between the legislature and the executive.”

“These committees are not legislating,” Trump’s brief in the case states. “They are avowedly engaging in law enforcement. All of them — to one degree or another — have acknowledged that the purpose of the investigations is to determine whether the president engaged in wrongdoing.”

The committees see the case differently. Congress’ power to investigate, they argue, is broad and implicit in the structure of the Constitution and there is a rich history of committees conducting investigations to ensure the laws on the books are functioning properly and to see if new laws are necessary.

Chief Justice John Roberts leaves President Donald Trump’s impeachment trial on Jan 29, 2020. (AP Photo/Patrick Semansky, File)

The court should give Congress a wide berth to exercise its legislative powers, the committees argue, and court precedent requires the subpoenas to be upheld so long as there is valid legislation that could come from them, regardless of if there is a separate, non-legislative purpose behind the requests.

“In 230 years, this court has never invalidated a congressional subpoena that was part of an ongoing congressional inquiry,” the committees’ brief states. “Petitioners and the solicitor general give this court no valid reason to do so for the first time here.”

Supporting Trump, the Justice Department argues the committees must show the information they seek is “demonstrably critical” to their legislative plans, a bar it says the committees have not met with the subpoenas. The agency further argues the fact that the Financial Services Committee and Intelligence Committee issued virtually identical subpoenas but claim a different legislative purpose betrays that the subpoenas are not meant to turn up documents that will inform legislation.

Chemerinsky said the Justice Department’s proposed test would up the standards Congress must meet to issue subpoenas.

“I think what it’s trying to do is put a higher burden on Congress to justify a subpoena than courts have ever done before,” Chemerinsky said.

After initial briefing in the cases, the court asked each side to file additional briefs explaining whether the legal principle that courts should generally stay out of political disputes between the other branches has any impact on the case.

Trump’s attorneys argue it does not and that the cases are justiciable. The court has just as much ability to rule on the validity of the subpoenas as it does to say whether an act of Congress is constitutional and the case would not require the justices to make a policy judgment, Trump argues.

On this point, the House and Trump agree. After all, the House argues in its supplemental brief that the court has a history of ruling on the validity of congressional subpoenas.

GianCarlo Canaparo, a legal fellow at the Heritage Foundation, said the supplemental briefing indicates the justices are considering the case not just in terms of a fight between Trump and Democrats in Congress, but in the context of the larger structural changes their decision might bring on.

“When the court is taking this long view of things and they step into this case and see it is political whirlwind, that is kind of a cue to them,” Canaparo said in an interview. “Because if a case involves the political branches it clearly has a political element to it — apart from the legal questions — maybe it should take a pause.”

New York Subpoena

The second arguments the court will hear Tuesday will be over a grand jury subpoena  New York City District Attorney Cyrus Vance issued to Mazars as part of an investigation into alleged hush-money payments made to adult film actress Stormy Daniels. That subpoena is nearly identical to the House Oversight subpoena, but also requests Trump’s tax returns. 

President Donald Trump speaks to reporters on the South Lawn of the White House last week. (AP Photo/Patrick Semansky)

Trump’s tax returns have been the target of Democrats since he broke with historical precedent and refused to release them during the 2016 presidential election.

The president sued to block the subpoena in September and a federal judge dismissed the suit, first saying it should have been pursued in state court and then ruling Trump did not have immunity.

The Second Circuit upheld the denial of the injunction, though it did not endorse the lower court’s view that the case should have gone through the state courts. The appeals court held presidential immunity does not extend to purely investigative measures like a grand jury subpoena.

In briefs to the Supreme Court, Trump argues the president is “absolutely immune” from state criminal process and that he is the target of the subpoena even though it was served on Mazars. Holding otherwise would violate the supremacy clause of the Constitution and subject the executive to the politically motivated prosecutions of state and local prosecutors across the country, he argues.

Local prosecutors would have major incentives to use criminal proceedings to investigate the president over political disagreements and allowing probes like that to proceed would “inevitably distract, burden and stigmatize the president” and prevent him from carrying out official duties, Trump claims.  

“The president cannot effectively discharge those duties if any and every prosecutor in this country may target him with criminal process,” Trump’s brief states.

Again supporting Trump, the Justice Department argues if the court endorses Vance’s subpoena, local prosecutors would inevitably “use such subpoenas to register their disapproval of the president’s policies.”

But Vance argues the subpoena is valid because it does not concern Trump’s official duties, but rather actions that took place before he became president. The court’s decision in Clinton v. Jones held that presidents are not immune from civil suits concerning conduct before they took office, while Nixon v. Fitzgerald granted immunity only to suits related to official actions.

Canaparo said it is interesting that both sides claim Clinton and Nixon support their argument, rather than the usual case where one side holds tight to precedents while the other tries to distinguish them from the case at hand.

The prosecutor argues there is a significant difference between the stigmas and burdens that come with indictment and prosecution and those that come with a subpoena. The Constitution does not prevent investigations that could result in a president being indicted once he leaves office, Vance argues, even if the Justice Department’s guidance that a sitting president cannot be indicted is valid.

“To guarantee that a president, along with individuals and entities connected to him are not permanently above the law, the grand jury must be permitted to collect evidence and follow leads when memories are fresh and relevant evidence is available,” Vance’s brief states. “Nothing in the Constitution requires otherwise.”

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