The Weekend Wrap: February 18, 2024

Trump appears headed towards first criminal trial in New York

Welcome to the Weekend Wrap! Here are the week’s white collar highlights:

Trump Prosecutions

New York State Case - Hush Money/False Business Records

After lurking in the background for months, the New York state criminal prosecution of Trump surged into the headlines last week and now appears destined to be the first criminal trial in history of a former president. At a hearing on Thursday, Judge Juan Merchan began by rejecting the multiple motions to dismiss that Trump had filed months ago. Over the objections of Trump’s lawyer, he then confirmed that trial will begin with jury selection on March 25, the date that had been set last fall.

New York Judge Juan Merchan

As a reminder: the charges here stem from the hush money Trump paid to adult film actress Stormy Daniels just prior to the 2016 presidential election. Daniels was prepared to go public with a story about a sexual encounter she says she had with Trump in 2006, shortly after his wife Melania gave birth to their son. Through a shell corporation he created, Trump’s attorney Michael Cohen paid Daniels $130,000 for the rights to the story so it wouldn’t be published - a so-called “catch and kill” scheme.

Paying hush money is not itself illegal. But if the payment was considered a contribution to the Trump presidential campaign and was not properly reported, that could violate federal election campaign laws. In 2018 Cohen pleaded guilty to campaign finance crimes for this scheme, along with other unrelated charges. But federal prosecutors in New York never charged Trump himself with campaign finance violations.

The New York state case charges that as part of the hush money scheme, Trump caused false documents to be filed in the records of the Trump Organization in violation of New York state law. Trump, Cohen, and Trump Organization CFO Alan Weisselberg agreed that Trump would reimburse Cohen and that they would falsely list the payments as legal expenses. They increased the total amount to be paid so Cohen would have money to pay the taxes on the payments, as well as to cover some other expenses and a year-end bonus.

Beginning in early 2017, Trump reimbursed Cohen through twelve monthly payments of $35,000 each. These payments were falsely recorded in the business records and check ledgers of the Trump Organization as legal expenses.

The New York indictment charges Trump with 33 felony counts of the state crime of falsifying business records. To make the charge a felony, the state must prove that the falsification was in furtherance of some other crime. In this case, prosecutors allege the false documents helped cover up the hush money payments and thus furthered violations of federal and state election laws as well as New York state tax laws.

As I wrote when the case was indicted, I have some doubts about the “intent to defraud” theory in this case, which involves purely internal records submitted to no one else and that no one had a right to see. But Judge Merchan has now ruled the allegations in the indictment are sufficient, and for now it looks like the trial will go forward. If and when Trump is convicted, this may become an issue on appeal — and if that happens, I’ll be happy to be proven wrong.

New York's Trump Indictment Raises More Questions Than It Answers

I’ll have a lot more to say about this case in the weeks ahead. Judge Merchan estimates the trial will last six weeks.

[In other New York news, you no doubt heard that on Friday the judge in the New York civil fraud case ordered Trump and his company to pay a fine of $355 million and barred Trump from serving in a top role in any New York company for three years. The civil lawsuit brought by the state is not related to the criminal charges in the hush money case. It stems from evidence that Trump routinely misrepresented the values of his assets for tax, insurance, and banking purposes. This judgment is obviously a very serious blow for Trump, but as a civil case it is outside my primary focus here on Sidebars.]

Georgia State Case - January 6 Allegations

Judge McAfee held two full days of hearings on Thursday and Friday on the defense motions to disqualify DA Fani Willis based on her relationship with a special prosecutor she hired, Nathan Wade. It was a tawdry couple of days, and no one came away looking great - including the defense attorneys who filed the motion. But in the end, I would be very surprised if Judge McAfee ruled that Willis and her office have to be kicked off the case.