The Weekend Wrap - July 30, 2023

Trump flunks the investigation

Welcome to The Weekend Wrap, a new feature on Sidebars. Each Sunday I’ll send shorter summaries with my thoughts on the important white collar crime developments from the last week and discuss what to watch for in the week ahead.  Cheers - Randall

The Trump Cases

Florida – Trump Flunks the Investigation

A friend and former colleague who now practices white collar defense says part of his standard advice to clients under scrutiny from the government is: “Don’t flunk the investigation.” He tells them that whatever has happened in the past, whatever the investigators are looking at, they can handle. But, he says, whatever you do, don’t make things worse by lying to the investigators or tampering with witnesses or destroying or hiding evidence. Don’t flunk the investigation.

Last week’s news in the Florida case indicates that’s exactly what Trump has done.

On Thursday, special counsel Jack Smith returned a superseding indictment in the case involving the classified documents kept at Mar-a-Lago. The indictment adds a third defendant: Carlos De Oliveira, the resort’s property manager. It also adds several new charges against Trump, who now faces forty felony counts.

The most significant new charges are allegations that Trump conspired with De Oliveira and the other co-defendant, Walt Nauta, to obstruct justice by unsuccessfully seeking to erase surveillance video footage after it was subpoenaed by the grand jury. That footage, which showed Nauta and De Oliveira moving Trump’s now-infamous boxes of documents around Mar-a-Lago to hide them from investigators and his own lawyers, ultimately became a key part of the government’s case.

These developments highlight the wisdom behind my friend’s advice. The new charges are absolutely devastating for Trump. If the case were just about retaining classified documents, he could at least try to make some of the arguments we’ve been hearing: that he had magically declassified the documents with his mind, or that the law allowed him to keep them, or that staffers had inadvertently stuck classified material in with his other papers. These defenses are neither persuasive nor consistent, but they at least suggest a lack of criminal intent.

But once you start destroying evidence – once you flunk the investigation – all those arguments go out the window. Obstructing the investigation is the best evidence of consciousness of guilt. It allows prosecutors to make one of the oldest and most effective jury arguments in the book: “Ladies and gentlemen, if he really believed he had a right to the documents and had done nothing wrong, why did he try to get his staff to destroy the video footage? Those are not the actions of an innocent man.”

It doesn’t matter, by the way, that they failed to erase the footage. A conspiracy to obstruct justice punishes the agreement to try, even if ultimately unsuccessful.

The superseding indictment also adds one more count against Trump for improperly retaining classified documents, bringing the total number of those charges to thirty-two. It refers to the document containing top secret war plans against Iran that Trump shared with unauthorized individuals at his Bedminster golf club in 2021. That incident was captured on tape, but Trump later suggested he didn’t really have the document and that he was just boasting. Now prosecutors have brought the receipts by charging Trump with unlawfully retaining that document. Presumably they also have witnesses from that meeting who will identify the document as the one Trump showed them.

This indictment is overwhelming. I don’t see any legitimate defenses for Trump. The best he can probably do is delay the trial as long as possible and then hope for at least one holdout juror who believes his “witch hunt” claims and will refuse to convict despite the evidence.

As this case progresses, we will watch to see whether either De Oliveira or Nauta decides to flip and cooperate. It would almost certainly be in their best interest. They’ve likely already had a chance to do that pre-indictment and apparently turned it down. For now, it appears they are remaining loyal and are willing to go down with the Trump ship – or at least willing to gamble that Trump gets re-elected and pardons them.

By the way, De Oliveira apparently is the staffer who reportedly drained the Mar-a-Lago pool and flooded the room where computer servers containing video surveillance footage were kept. That incident didn’t lead to any additional charges, but it did inspire this meme which, for “Succession” fans, won the Internet:

Washington, D.C. – Indictment Watch on the Potomac

Speaking of special counsel Jack Smith, all eyes are on Washington, where we expect Smith to indict Trump any day now on charges related to January 6 and the efforts to overturn the election. Trump recently received a target letter, and his lawyers reportedly met with prosecutors at the Justice Department last Thursday. These are all typical final steps that indicate an indictment is imminent. My recent post here described how that indictment might look.

Once the D.C. indictment comes down it will probably eclipse the Florida case in the public’s attention, much like the Florida case eclipsed the New York state prosecution. The D.C. case will be the most significant because it will focus on Trump’s most serious misconduct: his assault on democracy itself. It will also have a better chance of getting to trial before the 2024 election than the Florida case, which must deal with complicated legal issues concerning classified documents.

Georgia On My Mind – Indictment Watch II

Meanwhile, in Georgia, we are also expecting an indictment any day in the state criminal case based on Trump’s efforts to overturn the Georgia election results – including his “perfect phone call” to Georgia Secretary of State Brad Raffensperger asking him to “find” additional votes. Fulton County District Attorney Fani Willis has indicated indictments could be coming in early August. There were reports last week of barricades being erected around the Fulton County courthouse, suggesting that officials are preparing for some major news with potential security concerns.

Reports are that Willis may seek a sweeping indictment including charges under the state’s RICO law, charging Trump and perhaps as many as a dozen other defendants. That could make this case pretty interesting.

New York State Case Remains a State Case

The first Trump indictment, the New York state prosecution for concealing hush-money payments to Stormy Daniels, is moving forward for now after a federal judge recently rejected Trump’s claim that the case belongs in federal court. Trump can appeal that ruling. The trial is currently set for March of next year.

With both the Georgia and New York state cases, keep one thing in mind: even if Trump somehow was re-elected and was able to scuttle the federal prosecutions or pardon himself (as unlikely as that seems), he could not do anything about the state prosecutions. But the prospect of a state prosecuting a sitting president raises all kinds of novel constitutional issues. No one really knows how it would end up.

Other White Collar News

Hunter Biden Plea Deal Collapses

Last Wednesday Hunter Biden walked into court expecting to plead guilty to two misdemeanor tax charges. He was also going to admit to illegally possessing a gun but enter into a diversion agreement where that charge would be dropped if he met certain conditions for the next two years.

But the plea broke down. It appears the agreement – and the lawyers – weren’t clear about whether Biden was protected from possible additional charges in the future. Biden and his lawyers thought he was, but prosecutors said that was not part of the deal. The judge rejected the plea and sent them away to work it out.

When the deal was first announced I thought something about it sounded funny. The government’s press release said the investigation remained ongoing, despite the plea. Usually a plea agreement resolves whatever is pending and ends the investigation. Biden would have little incentive to enter into a plea that allowed prosecutors to continue investigating and file more charges later.

It looks like my instinct was right – the deal didn’t make much sense, and the lawyers didn’t really have a meeting of the minds concerning what it meant. Sounds like some careless lawyering on both sides.

It’s not that uncommon for a plea to break down, and this is probably temporary. The most likely outcome is that the parties work it out and come back to the judge with a new agreement in a week or two.

Republicans have tried to suggest there is something nefarious going on and that Biden got a sweetheart deal. There’s no basis for that, and the plea did not break down because of those kinds of claims. The U.S. Attorney in charge of the case was appointed by Trump and has testified he had complete authority to resolve the case with no interference from President Biden’s DOJ.

Don’t expect the facts to silence the Republican critics, though. The “Hunter Biden coverup” is destined to live on as another feverish conspiracy theory and Fox News chyron. As someone said on social media, “Hunter Biden is the new Benghazi.”

Crypto-Bro in Hot Water

Samuel Bankman-Fried (“SBF”) is the founder of the cryptocurrency exchange FTX who was indicted for fraud after the company collapsed. I wrote here about the case and the bare-bones indictment prosecutors returned last December. As expected, prosecutors later obtained a superseding indictment adding a lot more detail and additional charges. His trial is set for October 2.

Last week, prosecutors asked the judge to lock SBF up pending his trial. The surprise request came after SBF supplied some private documents to the New York Times about Caroline Ellison, his former girlfriend and business partner and now a star witness against him. This resulted in an article in the Times that cast Ellison in an unflattering light.

Prosecutors allege SBF is trying to taint the jury pool and indirectly harass a key witness. Initially they asked for a gag order, but this week they said they thought SBF should be detained pending his trial to prevent any additional shenanigans.

SBF and his attorneys responded that he has a right to defend himself and speak to the media, and accused prosecutors of overreaching. The judge is taking the motion under advisement.

Varsity Blues Parent Wants a Refund

Finally, here’s a rather amusing coda to the Varsity Blues case, the college admissions scandal.

John Wilson is one of the few parents who went to trial in Varsity Blues. Among other things, he was charged with paying the scheme’s mastermind, college admissions counselor Rick Singer, $1 million to help get Wilson’s daughters into Harvard and Stanford. Unknown to Wilson, Singer was already cooperating with government investigators. He never forwarded the money to the universities and Wilson’s daughters never attended them.

Wilson was convicted at trial but the First Circuit threw out most of his convictions on appeal. If you’re interested in more details about the reasons, see this post.

Wilson says the government was holding the million dollars for possible forfeiture. But now that the charges that could result in forfeiture have been thrown out, Wilson wants his money back. He filed a motion with the judge to order the government to return it to him.

It seems like a reasonable request. After all, he didn’t get what he paid for. And no doubt he has some legal bills to pay, in addition to that college tuition.

What to Watch Next Week

Without a doubt, the main thing to watch for next week is the possible indictments in D.C. and Georgia.

It seems inevitable that soon we will have a former president and leading contender for the 2024 Republican nomination who is facing not two, not three, but four separate criminal cases, all of which will be moving forward during the campaign and primary season.

We are well past the point where “unprecedented” has become a cliché. Let’s just say there’s going to be a lot to watch and discuss.