Charging Trump hush money case as felonies involves uncertain legal path | Donald Trump

Prosecutors in the Manhattan district attorney’s office escalated 34 regular falsifying business records charges against Donald Trump to felonies by arguing the former president concocted a scheme to conceal election law violations and deceive tax authorities, the unsealed indictment showed on Tuesday.

The grand jury charged the former president after Trump’s reimbursements to his then fixer Michael Cohen for $130,000 in hush money paid to adult film star Stormy Daniels in 2016 were falsely recorded as legal expenses.

But falsifying business records is normally a misdemeanor offense, unless prosecutors can show that a defendant intended to commit, aid or conceal a second crime, leaving legal experts speculating for weeks about the possible paths to upgrade the charges to felonies.

The Manhattan district attorney, Alvin Bragg, suggested on Tuesday that prosecutors have at least two theories for the second crime, alleging foremost that Trump’s scheme violated federal and state election laws – and also that records were falsified for tax purposes.

“It’s a fairly straightforward business records charge,” said former Manhattan assistant district attorney Rebecca Roiphe. “It’s a way of charging it so that you can defend each count on all grounds, and if the court chooses to reject one of the arguments, the others still stand.

“I don’t think the concern that the crime that this would be furthering for felony purposes is a federal crime is a big deal at all,” Roiphe said. “But factually, if they could prove the state tax crime it’s just much simpler.”

By pursuing the election law route, prosecutors are relying on an untested legal question concerning campaign finance violations

Prosecutors indicated in the statement of facts, released after Trump’s arraignment, that they would tie the bookkeeping fraud directly to election law violations because Trump orchestrated the hush money scheme only to protect his 2016 presidential campaign from negative stories.

The scheme operated through an agreement between Trump and the chief executive of the National Enquirer’s parent company, American Media Inc, which involved looking out for and killing negative stories about Trump that could damage his 2016 campaign.

Importantly, prosecutors tied the scheme to the campaign – crucial to making an election law case – by citing the National Enquirer’s 2018 non-prosecution agreement that admitted it paid for Daniels’ story “before the 2016 presidential election and thereby influence[d] that election”.

But by pursuing the election law route, prosecutors are relying on an untested legal question. To cite federal election law raises the issue of whether a state prosecutor can use a federal crime – that he cannot himself charge – to bolster a state prosecution, though the New York law under which Trump was indicted does not say the second charge must be a state crime.

At a news conference, Bragg referenced both federal and state laws without specifying either: citing a New York state election law that makes it a misdemeanor to conspire to promote a candidacy by unlawful means, and citing the federal cap on campaign contributions.

Some legal experts had questioned for weeks the strength of the underlying crime on the basis that if the Trump Organization’s purely internal records were falsified and never submitted to a government agency, corrupt intent might be more difficult to identify.

Meanwhile, in their second theory, prosecutors are alleging that Trump’s reimbursements to Cohen were fraudulently mischaracterized for tax purposes.

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Prosecutors described how Trump approved his company, the Trump Organization, to “gross up” the reimbursements to Cohen so that his then fixer could characterize the money as income and not be out of pocket after he paid 50% income taxes on the reimbursements.

The arrangement involved Cohen needing to be reimbursed for the $130,000 he paid to Daniels, as well as another $50,000 in unrelated expenses. Trump then authorized the Trump Organization to double that $180,000 to $360,000, so Cohen would be left with $180,000 after taxes.

“The participants also took steps that mischaracterized, for tax purposes, the true nature of the payments made in furtherance of the scheme,” prosecutors said in the statement of facts.

Bragg emphasized the tax element even as he remained vague. At one point he seemed to suggest it showed Trump and Cohen violated state law against conspiring to promote a candidate through unlawful means. At another point, he suggested it amounted to submitting false information to the state.

The arrangement, though, meant Cohen ultimately ended up paying New York state an extra $180,000 in taxes that the state would not have otherwise received had Trump not engaged in the hush money scheme in the first place – and legal experts queried whether that was fraudulent.

The crux of the suggested conspiracy is whether the Trump Organization paid tax on what it characterized as a potentially deductible legal expense.

“It’s possible that Trump didn’t do this in order to get a tax break – that’s what they did in the Weisselberg case, they just try to save money on taxes wherever they go,” Roiphe said. “But is paying off a porn star deductible? If it’s deductible, this is a pretty bad claim.”

The district attorney noted at his news conference that he was not obliged to detail specifics at this stage, probably in part to protect against motions to dismiss from Trump. But he will have to eventually specify his arguments in the coming weeks of pre-trial hearings.

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