New York's Trump Indictment Raises More Questions Than It Answers
Many legal hurdles lie ahead for prosecutors
We now have seen the historic first indictment of a former president of the United States. Manhattan District Attorney Alvin Bragg has charged Donald Trump with thirty-four felony counts of falsifying business records in violation of New York law.
As expected, the charges relate to the hush-money payoff to adult film star Stormy Daniels. Trump’s attorney and fixer Michael Cohen used a shell company to pay Daniels $130,000 to prevent her from publicizing her past sexual relationship with Trump just before the 2016 presidential election.
Following the election, Cohen sent the Trump Organization monthly invoices for legal services, pursuant to a purported retainer agreement that did not exist. Throughout 2017 Trump reimbursed Cohen through a series of monthly checks from Trump Organization entities. The checks and related documents were falsely recorded in the books of the Trump Organization as payment for legal services.
All 34 counts relate to records the Trump Organization maintained concerning these reimbursements. Eleven are based on false invoices from Cohen, purporting to reflect legal services provided. Twelve counts are based on false ledger entries about the payments. Eleven more are based on the actual checks to Cohen, most of them signed by Trump after he was elected president.
Trump was arraigned on Tuesday and pleaded not guilty. The parties are not due back in court until December. Between now and then, expect a flurry of motions by Trump’s attorneys, seeking to get the case thrown out on various grounds. If they are unsuccessful it’s not clear when a trial would take place, but it could be next year in the middle of the presidential primary season.
The indictment is very bare bones, although the accompanying statement of facts does provide more details about the nature of the alleged scheme. Now that the case is filed, we will have to let the legal process play out as the government moves forward to prove its case.
But I have so many questions.
1: Where Is the Intent to Defraud?
The New York crime of falsifying business records, Penal Law § 175.05, is a misdemeanor. It becomes a felony under § 175.10 if the records are falsified to aid in the commission or concealment of another crime.
Both the misdemeanor and felony require that the false entries were made “with intent to defraud.” As I wrote in this recent post, I’m not sure the DA can meet this requirement.
Intent to defraud in criminal law generally means intent to deprive a victim of money or property or something else of value. If the alleged scheme is to deprive voters of relevant information about candidate Trump, that likely will not qualify. Voters may have been deceived, but they were not defrauded.
In an article in Just Security written in response to my argument, the authors made the fair point that some New York courts have adopted a broader definition of “to defraud.” These courts have held that where the victim of the fraud scheme is a government agency, a scheme to defraud can include a scheme carried out to frustrate the state’s ability to enforce its law, even if there is no deprivation of money or property.
There is a similar rule in federal conspiracy prosecutions under 18 U.S.C. § 371. In a 1924 case called Hammerschmidt v. United States, the Supreme Court held that a scheme to defraud the federal government could include a scheme to impair, obstruct, or defeat lawful government functions through deceptive or dishonest means. (This is often mentioned as a potential charge for Trump and others involved in the events of January 6, 2021 and the efforts to overturn the election: that they conspired to defraud the United States by impairing, obstructing, or defeating the lawful function of Congress to certify the election results. This was one of the criminal charges in the referral to DOJ from the January 6 Congressional Committee.)
The New York courts appear to be mixed on this question and there is no definitive ruling from the state’s highest court. If Bragg’s theory is that the false entries were part of a scheme to defraud an agency such as the New York State Board of Elections, then a court might apply this broader definition. If his theory is that it was a scheme to deceive the voters, I think a court is likely to hold that does not constitute fraud. (Part of the problem, as I discuss below, is that we don’t know exactly what Bragg’s legal theory is.)
On this and other issues, this may be the case that results in New York’s highest court providing some clarity.
2: Can These Records Prove Intent to Defraud?
Even if the judge in Trump’s case were to adopt the broader definition of fraud, there is a second problem with proving “intent to defraud” in this case: can an intent to defraud be found based on purely internal records not seen by anyone else?
Typically, to say a defendant made a document with an intent to defraud suggests the defendant intended for someone to rely on the false document and thereby suffer some kind of injury. This case concerns alleged false entries in the books of the Trump Organization, a private company. They were not submitted to election authorities or shared with anyone else. The voters had no right to see them. Indeed, if the company books had accurately recorded the payments as, “Hush money to benefit the Trump campaign,” voters and election officials never would have known the difference.
Given these facts, how will prosecutors prove these false entries were made with the intent to defraud? How do you defraud someone through internal records they never see and have no right to see? The indictment doesn’t specify, and Bragg did not elaborate at his press conference following Trump’s arraignment.
Those who claim there is nothing unusual about false records charges related to campaign-related crimes (including those same authors in Just Security) point to cases where the false records were actually submitted to the New York State Board of Elections or other outside entities. Submitting false records to a third party does indeed indicate an intent to defraud – but we don’t have that here. There’s no allegation anyone outside the company ever saw or relied upon these false records.
Whether internal documents that are not submitted or shared anywhere else can violate this statute has been the subject of some lively debates on Twitter among me and more than a dozen other attorneys over the past week or so. No one has found a reported case where a court has ruled on this theory. On the other hand, respected veterans of the Manhattan DA’s office have said that bringing this charge for purely internal documents is very common.
As I understand it, here’s the argument in support of this position: it’s irrelevant that these records were not submitted to anyone else. They were falsified so in the event anyone DID come poking around – the Federal Election Commission, New York Authorities, a private litigant, etc. – the false records could then be produced to hide the hush money payoff and cover the company’s tracks. Preparing false documents in anticipation of a possible need to produce them somewhere sometime in the future should qualify as intent to defraud.
This argument may succeed, but I’m not convinced. It suggests that keeping false internal records “just in case,” standing alone, violates the statute. If that’s true, then I’m not sure what the “intent to defraud” element adds. That requirement seems to imply some more affirmative use of the false records as part of a fraud scheme.
It’s a little surprising and concerning that there is no reported case upholding the legal theory at the heart of this indictment. This could be because the question just doesn’t arise very often. It appears the false business records crime is often charged in conjunction with the other crimes being promoted or covered up by the false records, so the role of those records in a scheme to defraud is clear. Here the business records charge is the entire case.
I don’t doubt those veterans of the DA’s office who say this kind of charge is common. But I think the question is whether the legal theory has ever been challenged as aggressively as it undoubtedly will be in this case. We’ll see how it holds up under that challenge.
3: Who Was the Victim?
Another unanswered question in this indictment is the identity of the victim(s) of this alleged fraud. If the false documents were created with the intent to defraud, who was supposed to defrauded? Was it the Federal Election Commission? The New York State Board of Elections? New York tax authorities? At his press conference Bragg referred generally to a scheme to keep information from the voting public – so is it the voters themselves who are the victims of the alleged fraud? The indictment doesn’t say, and Bragg did not elaborate.
As I argued above, whether this conduct amounted to a scheme to defraud at all may well depend on the identity of the alleged victim. If it was some government body, a court may agree with a broader definition of fraud; if it was the voting public, I think that becomes much less likely.
The DA will need to articulate his theory at some point, but for now we are in the dark. It’s a little surprising to see an indictment alleging a fraud scheme without identifying the victim of the fraud.
4: What’s the Other Crime?
To make these charges a felony requires that the business records were falsified to aid in committing or concealing another crime. But the indictment doesn’t specify which crime (or crimes) these false entries allegedly promoted or concealed.
The statement of facts relies heavily on Michael Cohen’s guilty plea to federal campaign finance violations, suggesting perhaps that was the relevant “other crime.” At his press conference Bragg also referenced New York campaign laws and unspecified potential tax violations but declined to be more specific. When pressed, he noted somewhat defensively that the law does not require prosecutors to specify the underlying crime at this stage.
Some veterans of the DA’s office have noted that this ambiguity is standard practice and probably deliberate. It allows prosecutors flexibility to adapt and change their theory before trial. That may be true, but it’s a little unsettling to think that after more than six years prosecutors still may not have settled on their approach.
Each potential theory regarding the “other crime” raises substantial legal questions. If, as it appears, the theory is the defendants were trying to conceal an illegal federal campaign contribution (the charge to which Cohen pleaded guilty) it’s not clear a federal criminal violation can be used as the basis for this state charge. In fact, despite Cohen’s guilty plea, it’s not clear this kind of hush money payment constitutes a campaign contribution at all.
Bragg also mentioned New York state campaign laws, including one that makes it a crime to conspire to influence an election by unlawful means. But state campaign laws were likely pre-empted because this was a federal election. If that’s the case, it’s unlikely a law that didn’t even apply to the election could serve as the “other crime” to make this charge a felony.
Bragg also alluded to tax charges, and some have seized on that possibility as a way potentially to avoid some of the thorny legal issues surrounding campaign finance law. But as I noted in my last post, it’s not apparent there was any tax loss to New York, either from Cohen or the Trump Organization. No tax loss is alleged in the indictment, and no tax violations were included among the charges. (Why not, by the way, if the “other crime” is going to be a tax crime? Another question.)
In fact, it appears Trump and others went out of their way to make sure Cohen had extra money so he could pay taxes on the reimbursements. When it comes to tax revenue, New York may have actually made money on this deal. If the argument is going to be there were false statements on Cohen’s returns but New York actually came out ahead, that’s not a very compelling criminal theory. But again, other than a vague reference to tax violations, we have no idea what prosecutors are thinking.
5: How Will They Prove Trump’s Intent?
These are all significant legal hurdles, but there will be factual ones as well. This will be a classic white collar case where the key issue is the defendant’s intent. Prosecutors of white collar crimes usually are not trying to prove observable events, such as “who pulled the trigger” or “who had the drugs.” They are trying to prove what was going on in someone’s head. That can make these cases particularly challenging.
Any trial will come down to Trump’s state of mind. Did he act with the required intent to defraud? Or did he act merely to conceal embarrassing information for family or business reasons? Was he fully aware of the nature of the scheme, including the false entries? Or was he just signing checks put in front of him as part of a plot that was largely executed by others?
For these charges, prosecutors are going to have to prove more than just Trump’s knowledge about the hush money, which seems pretty clear. They are going to have to prove his knowledge and intent regarding how the records were maintained on the books of the Trump Organization. That aspect of the scheme may be something easier for him to pin on the accountants and lawyers.
Proving a defendant’s intent can be challenging under the best of circumstances. In a case that’s more than six years old and where the government’s star witness, Michael Cohen, is a convicted felon and admitted perjurer, those challenges are multiplied.
What Comes Next?
Prosecutors will need to answer some of these questions before long. The defense almost certainly will file a motion for a Bill of Particulars, which requires prosecutors to provide more information about their case and legal theories. The judge should grant that motion.
There will be months of motions practice between now and December, when the parties are due back in court. If the case survives, we should learn a lot more about the DA’s legal theories. But there are many hurdles for prosecutors to clear before they get this case in front of a jury. In the meantime, other indictments may be handed down from Georgia or from special counsel Jack Smith that will push this case into the background.
Despite DA Bragg’s claims at his press conference, this is far from a routine “bread and butter” case. To suggest the case may have some flaws is not to condone Trump’s conduct. The issue is not whether Trump behaved badly – of course he did. The issue is whether his conduct violated the specific state crime charged here. That is far less clear.
In an ideal world, you’d want such a politically fraught prosecution to be a rock-solid case, one that raises no novel or unsettled issues. You’d want it to be so compelling that no fair-minded person could question its merit. And you’d want the indictment, the first public statement of the allegations, to make that crystal clear to the public.
Unfortunately, this is not that case.
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I like the author’s concise review of the issues and unanswered questions involved in this case. Easily read and informative about the legal complexities associated with this prosecution. Great job!
By the way, one may hereby, reach Hmmerschmidt v. US (mentioned in the post, but not linked). Here: