No Surprise: The Second Circuit in NYC clears the way for the president’s accountants to turn over records relating to his dealings more than a decade ago.
Today’s Trump v. Vance decision by the Second Circuit Court of Appeals in Manhattan, holding that President Trump’s tax-return information must be turned over to state prosecutors, is no surprise.
As the court relates, a New York State grand jury is investigating the circumstances surrounding the “‘hush money’ payments made to two women” — a reference, no doubt, to former Playboy model Karen McDougal and porn star Stefanie Clifford (a.k.a. “Stormy Daniels”), who claim to have had flings with Donald Trump a decade before he was elected president. In the course of the investigation, a subpoena was issued to the Trump organization for related “documents and communications.” Prosecutors interpreted this subpoena to cover the president’s personal tax returns from the relevant period (June 2015 through mid-September 2018). The president’s private counsel objected, and the Trump organization (which is wholly owned by the Donald J. Trump Revocable Trust, of which the president is grantor and beneficiary) has not produced any such tax documents.
Meanwhile, prosecutors served another subpoena, this time on Mazars USA LLP. That is the accounting firm that possesses financial records pertaining to the president’s personal and business dealings. The Mazars subpoena covers a period stretching back to 2011. It explicitly demands production of any “tax returns and related schedules, in draft, as-filed, and amended form.”
The president discouraged Mazars from complying. He claimed sweeping immunity from state criminal process while he is in office, and thus sought a declaratory judgment that the subpoena was invalid, along with an injunction barring the district attorney from taking any action to enforce the subpoena.
That was the claim rejected today by the unanimous three-judge panel.
Writing for the court, Judge Robert Katzman stressed that the ruling addressed only the facts at issue. That is, the court is not saying that the president must personally surrender information (no state subpoena appears to call for that); nor is it saying the president may be prosecuted by state authorities, if it ever comes to that. The only thing before the court was a subpoena demanding the production of documents in the possession of the accountants.
In the seminal case of United States v. Nixon (1974), the Supreme Court held that President Nixon himself was required to produce information that was (i) in his possession, (ii) relevant to a criminal investigation, (iii) related to activities he undertook as president, and (iv) covered by executive privilege. Here, while the information at issue is similarly relevant to a criminal investigation, it is by contrast in the possession of a third party (the accountant), not related to Trump’s activities as president, and not covered by executive privilege.
The court did not reject the possibility that there may be some presidential immunity (during the term of the presidency) from the burdens of criminal investigations and prosecutions. Nor did it attempt to outline what the parameters of such immunity may be. The judges merely held that, even assuming some degree of immunity, it does not apply to a third party’s production of unprivileged information that is not germane to the president’s conduct in office, and that is related to an investigation the district attorney is within his jurisdiction to pursue.
The president’s private lawyers indicate that an appeal to the Supreme Court is the likely next step. I have some doubt that the justices will agree to hear the case, in light of the narrowness of the Second Circuit’s ruling, along with the facts that (a) the subpoena is not directed to the president personally, and (b) it is not necessary to grapple with the nature and potential scope of presidential immunity in order to decide that any such immunity would not extend to the accountants.
The Democrat-controlled New York State government is clearly politicizing its law and enforcement to target Trump. Earlier this year, in a transparent effort to discourage the president from pardoning his former campaign chairman Paul Manafort on federal convictions, the same Manhattan District Attorney’s Office indicted Manafort — even though the New York State Constitution would give Manafort double-jeopardy protection. Moreover, a few months back, the state passed a law specifically designed to make it easier for Congress to seek the president’s state tax returns.
We ought to find this disturbing, notwithstanding that Trump made himself a target by (a) reneging on a commitment to release his tax returns during the 2016 campaign; and (b) the way the hush-money payments were timed and structured. (As we’ve discussed here, there is nothing illegal or inappropriate about nondisclosure agreements, which are a staple of litigation settlements; but if they are timed suspiciously during an election season, or if they are booked in peculiar ways in a business’s ledgers, it is only natural that prosecutors will consider whether federal campaign-finance or state corporate-recordkeeping violations have occurred).
All that said, the Second Circuit had to decide the question before it. (The judges properly declined to follow the lower federal court’s decision to abstain from the case out of deference to the state proceedings.) The panel’s decision is appropriately narrow and does not bar the president from making an immunity claim in the event that state prosecutors seek information directly from him, or if they attempt to charge him while he is in office.