What the Supreme Court ruling means for Manhattan DA's Trump criminal investigation

President Trump and his administration have said many times that he would release his income tax returns.

Posted: Feb 22, 2021 10:49 AM
Updated: Feb 23, 2021 1:00 AM


After 17 months and two trips to the US Supreme Court, the Manhattan district attorney's criminal investigation into former President Donald Trump's business has received a significant boost with investigators now able to pour over Trump's tax returns and financial records.

The district attorney's office, led by Cyrus Vance, is expected to have access to the records within the next few days, according to people familiar with the matter.

Vance's office and Trump's long-time accounting firm Mazars USA, which was subpoenaed for the records, have been in discussions for months about how the documents, mainly in electronic form, would be handed over securely, these people said.

Once prosecutors have the tax-related records in hand, they will be able to dig deeper into investigative theories, pursue interviews with key witnesses, and determine whether they believe any state laws have been violated.

In addition to the tax returns going back to 2011, Vance has subpoenaed four other categories of documents, including financial statements, engagement agreements, documents relating to the preparation and review of tax returns, and work papers and communications related to the tax returns.

The records may be critical to the investigation because they are likely to contain documents that reflect the decision-making behind valuations and tax write-offs, which may be important to determine whether there was intent to commit a crime.

Prosecutors have wanted to review the documents before calling key witnesses before the grand jury, people familiar with the inquiry said. Under New York law witnesses are granted 'transactional immunity' and cannot be prosecuted for any crimes relating to their testimony as a grand jury witness. Once prosecutors have those documents, they can begin to take those steps.

Still, it will take investigators time to review the records and piece it together with other documents and testimony. The Trump Organization is comprised of dozens of limited liability companies, each with their own financial statements and tax returns.

Mazars said in a statement that it 'remains committed to fulfilling all of our professional and legal obligations.'

Trump, in a statement, said, 'For more than two years, New York City has been looking at almost every transaction I've ever done, including seeking tax returns which were done by among the biggest and most prestigious law and accounting firms in the U.S.' He called the investigation a 'fishing expedition.'

Following the ruling, Vance said in a tweet, 'The work continues.'

The clock is ticking

The ruling that denied Trump's last bid to block the subpoena removes a significant hurdle to the criminal investigation, which has been underway for more than two years.

The probe recently picked up momentum with the addition of a new prosecutor experienced in financial investigations and continued interviews with witnesses.

The district attorney's office is investigating whether Trump and the Trump Organization engaged in tax fraud, insurance fraud and other schemes to defraud, including potentially providing false information to financial institutions or banks about the value of certain buildings and assets.

Prosecutors have said Trump's financial records are critical to their investigation, citing the statute of limitations. Investigators are working with a five-year statute of limitations for most New York state felonies that cover the areas under scrutiny.

As prosecutors have waited for the court to rule, they have subpoenaed records and interviewed employees at Deutsche Bank about Trump loans, and insurance broker Aon, according to multiple sources familiar with the investigation. Deutsche Bank has loaned Trump more than $300 million.

Prosecutors have also subpoenaed Ladder Capital, which has loaned the Trump Organization over $100 million.

In addition, investigators have subpoenaed the Trump Organization for records relating to fees paid to consultants, including Ivanka Trump, these people said.

And more recently prosecutors expanded their inquiry into the tax treatment of a conservation easement the Trump Organization arranged on an estate called Seven Springs in Westchester County, NY.

They've also brought in external experts, by hiring FTI Consulting and earlier this month added Mark Pomerantz, a prominent former federal prosecutor with expertise in complex financial investigations.

Last week, a representative for the New York City mayor confirmed the New York City Tax Commission received a subpoena regarding Trump Organization properties.

Tax and fraud cases are difficult

Former prosecutors say bringing a tax or financial fraud case is difficult, especially since Trump relied on lawyers and accountants for advice. Adding to that is the complexity of real estate, where there is more leeway in deriving valuations.

In some instances, they say, certain tax write-offs or valuations may on the surface appear suspicious but could turn out to be proper under the law.

Sophisticated lenders also conduct their own internal reviews before extending millions of dollars, former prosecutors say, noting that cases where the lender hasn't suffered a loss are difficult to prove.

Trump is likely to argue there were different legal reasons for valuing a real estate asset one way when seeking a loan to reflect its potential growth but would have a legal basis to value it differently in a tax return when reflecting its current value.

Another open question is whether prosecutors will complete their investigation under Vance's leadership.

Vance's term runs through the end of the year and he is not expected to run for reelection, according to a person familiar with the matter. Several Democratic candidates, including former prosecutors, have already declared their intentions to run to be district attorney.

New York Coronavirus Cases

County data is updated nightly.

Cases: 1656684

Reported Deaths: 47818
CountyCasesDeaths
Queens2129278804
Kings2121249144
Suffolk1633163095
Nassau1492512926
Bronx1452265897
Westchester1081932105
New York1044443917
Erie655711607
Richmond574051580
Monroe52759992
Rockland38797891
Orange37232720
Onondaga32489634
Dutchess22457408
Albany20931333
Oneida19763478
Niagara15351312
Broome14913336
Saratoga12002145
Schenectady10870178
Ulster10096228
Rensselaer9059132
Putnam838986
Chautauqua7341123
Chemung6445130
Oswego600889
Ontario581388
St. Lawrence556386
Steuben5516137
Cayuga538688
Jefferson481663
Sullivan477159
Herkimer4568107
Wayne448264
Cattaraugus443376
Genesee4420118
Madison385485
Clinton364526
Livingston355856
Tompkins346142
Columbia340596
Fulton335184
Montgomery3199107
Cortland317260
Allegany290681
Warren285455
Wyoming283349
Tioga281356
Greene265071
Orleans245281
Chenango244369
Otsego236043
Washington235352
Franklin209812
Lewis207330
Seneca162653
Delaware152433
Essex134726
Schoharie121512
Yates101526
Schuyler86812
Hamilton2852
Unassigned197131
Out of NY0192
Rome
Cloudy
30° wxIcon
Hi: 25° Lo: 21°
Feels Like: 20°
Binghamton
Cloudy
30° wxIcon
Hi: 29° Lo: 22°
Feels Like: 20°
Rome
Cloudy
30° wxIcon
Hi: 26° Lo: 22°
Feels Like: 20°
Rome
Cloudy
30° wxIcon
Hi: 18° Lo: 18°
Feels Like: 20°
WKTV Radar
WKTV Temperatures
WKTV Severe Weather
Submit your Mutt Madness Picture through March 10th
March into Beautiful Skin Giveaway
2021 Golfer's Paradise Card - 21 Courses for only $99.99
Saluting Those Who Are Proud 2 Serve