MANHATTAN (CN) — New York investigations into the business dealings of former President Donald Trump have been underway for years, but recent news suggests cases against the Trump Organization, and perhaps Trump and his children, are getting close to charges being filed.
State Attorney General Letitia James is leading a civil investigation into the organization, and is also working with the Manhattan District Attorney’s office looking into criminal charges. Both efforts examine whether the organization and its namesake inflated property values to get better loan terms, or minimized them for tax benefits.
While the parallel investigations could result in different outcomes for Trump’s business and the former president himself — cataclysmic financial penalties in the civil suit, and the chance of prison time in the criminal probe — they may also intertwine to advance the mounting case against him, experts explain.
Grand jury proceedings are secret, but insiders have said they included the questioning of an accountant for Trump as well as one of his longtime bankers, according to a report in The New York Times. Accountants who gave lenders annual statements of the organization’s financial status said they prepared the documents using information from the organization itself, raising the question of whether Trump misled his own accounting team.
To legal experts, the interviews suggest that prosecutors are trying to get someone high up in the organization to cooperate.
“Somebody at some point, I think, has got to flip on him,” said law professor Kevin C. McMunigal — and when that happens, “the dominoes will start to fall.”
The strategy is familiar to McMunigal, a criminal law professor at Case Western Reserve University and a former federal prosecutor.
In his investigations as a U.S. attorney, “it was all built on rolling people and moving up the chain, getting people to cooperate,” McMunigal said.
The first criminal indictment from the Trump investigation was unsealed in July, naming both the Trump Organization and one of its top executives, Allen Weisselberg. He pleaded not guilty to hiding $1.7 million of indirect compensation to evade thousands of dollars in federal, state and local taxes. Manhattan District Attorney Cyrus R. Vance Jr. gained access to tax records days after the Supreme Court refused to block a subpoena.
Last week, James announced that she is seeking to depose Trump as part of the civil investigation. That’s likely to center on meetings and submissions to banks and tax authorities that the AG’s office has already uncovered: “They’re going to be marching Trump through all that stuff,” said attorney Tristan Snell, who helped to lead the investigation and civil prosecution of Trump University in 2013.
Snell said that involving Trump suggests James’ office has “90 to 99%” of what they need to file a lawsuit. Unlike a criminal complaint, which can be sparse on details that will later unfold during trial, James will come with receipts — in the form of “bankers’ boxes worth of exhibits.”
“When the AG actuall does drop the bomb, there will be a ton of evidence to comb through on day one,” Snell said.
That day may not be far off, said Snell, who expects charges filed this winter or next spring. James wants to set Trump’s deposition for January 7, 2022.
If it goes forward, Trump could also refuse to answer questions, invoking his Fifth Amendment right.
But that could have consequences for his criminal trial: In civil court, remaining silent could result in liability, and statements from a civil deposition can be used in the criminal case.
“If he takes the Fifth on too many things, he’ll lose the civil case,” Snell said. “He’ll be toast.”
Trump’s lawyers said they plan to fight the subpoena. Other factors — including concerns about optics during a 2024 presidential bid — could also play a role in the decision.
“Honestly a lot of it is going to be whoever is in his ear, and what his media diet is these days,” Snell suspects. “There's a chance he’ll testify and say, ‘I don’t want to look weak,’ … but I think he’s probably going to fight it.”
Three years before Trump would win his run for president, Trump University settled the AG’s case for $25 million, discounted from the $42 million the office was seeking.
Penalties resulting from James’ case could be financially devastating.
“He could end up being forced into a position where he actually has to start selling off properties in order to pay that money, and pay his creditors,” Snell said.
An advantage of bringing state charges, as opposed to federal ones, is that they’re beyond the reach of federal pardons.
Compared with the civil filings that banks, like Deutsche Bank, could bring, James’ anticipated suit also has a better shot at getting results, Snell said. That’s because she can file it under section 63(12) of Executive Law, a simpler statute that doesn’t require intent, or that the defrauded parties reasonably relied on misrepresentations.
Based on how flagrant the reported value inflation is, some experts believe the Trump Organization’s goose is cooked. Records show that an office building on Wall Street was listed as a $527 million asset; months later, it was reported to be worth $16.7 million, or one-thirtieth of the value claimed the year before.
“You can’t look at that and say it wasn’t done internationally. It’s so intentional it hurts,” Snell said. “You don’t make a mistake of that magnitude — you can’t. That’s not a rounding error.”