Trump Not Immune From NY Demand for Tax Returns, Judge Says

October 8, 2019by Bob Van Voris and Christian Berthelsen
President Donald Trump arrives at the White House in Washington, D.C., on September 26, 2019. (Jim Watson/AFP/Getty Images/TNS) **FOR USE WITH THIS STORY ONLY**

NEW YORK — President Donald Trump’s accounting firm was ordered by a federal court to turn over his tax filings and other financial records to New York state prosecutors, though the president won a last-minute delay pending an emergency appeal.

A federal judge in New York ruled early Monday that Trump can’t stop his accountants, Mazars USA LLP, from turning over eight years of taxes and other financial documents to Manhattan District Attorney Cyrus Vance Jr., whose office is investigating whether the Trump Organization falsified business records related to hush payments. The judge called Trump’s claims of immunity “repugnant” to the U.S. Constitution.

Trump immediately appealed and in less than two hours won a delay to give the federal appeals court in Manhattan time for expedited review. The delay postponed what would have been a Monday afternoon deadline for Mazars to begin turning over the records to prosecutors.

The ruling means that Trump is closer to losing control of his tax filings and other financial records after years of defying a modern presidential norm of disclosing them to the public.

U.S. District Judge Victor Marrero rejected Trump’s request for an injunction to block a grand jury subpoena for Trump’s personal and business records, ruling that the case should have been filed in state court rather than federal court. But he also ruled against the president’s constitutional claims, calling his argument for immunity from investigation “virtually limitless.”

Trump asserted broad claims of presidential immunity from criminal investigation, extending to his company and business associates as well. But the judge found the assertion overly broad and dismissed Trump’s argument, saying it “would constitute an overreach of executive power.”

Marrero’s ruling marked another crack in the legal wall Trump has constructed around his personal financial records. Two judges have already ruled against Trump in other federal cases involving his financial records, and the president is appealing those decisions. The stakes of the legal fight have only increased with the Democrats starting a formal impeachment inquiry.

Trump assailed the ruling in a tweet shortly before the appeals court issued its temporary order.

“The Radical Left Democrats have failed on all fronts, so now they are pushing local New York City and State Democrat prosecutors to go get President Trump. A thing like this has never happened to any President before. Not even close!” he tweeted.

Even if New York prosecutors obtain the financial records, the public won’t see them. Lawyers from Vance’s office told Marrero that New York law and legal ethics rules required them to keep the material secret. But information from the returns, or the documents themselves, could be used to develop cases or presented as evidence in a trial.

“This court cannot endorse such a categorical and limitless assertion of presidential immunity,” Marrero wrote in his ruling. “The expansive notion of constitutional immunity invoked here to shield the president from judicial process would constitute an overreach of executive power.”

Harry Sandick, a former federal prosecutor and partner at Patterson, Belknap, Webb & Tyler in New York, said the ruling was clear.

“The court was unwilling to accord the type of absolute immunity Trump’s lawyers asked for,” Sandick said. “The founders meant to give us a president, not a king.”

If Trump loses in the federal court system, he could still try to block the subpoena by suing in state court, potentially drawing out the process. Mazars took no position in the case.

Vance is seeking evidence about hush payments made to adult film star Stormy Daniels and former Playboy model Karen McDougal, who say Trump had extramarital trysts with them. Federal prosecutors last year charged Trump’s former personal lawyer, Michael Cohen, with coordinating payments to Daniels and McDougal at the direction of Trump, whom federal prosecutors famously referred to as “Individual 1” in court papers.

Cohen pleaded guilty last year to campaign-finance violations, tax evasion, bank fraud and lying to Congress and is serving a three-year prison term. In a remarkable turnabout, the same Justice Department that prosecuted Cohen and labeled Trump as “Individual 1” took preliminary steps this month to back Trump’s argument that the president can’t be investigated by state authorities.

The appeals court set Oct. 21 as the soonest date it may hear arguments in the appeal. The court ordered Trump’s legal team and lawyers from the Justice Department to file briefs by Oct. 15. Vance has until Oct. 17 to respond.

Justice Department policy, dating back to 1973 and reaffirmed in 2000, holds that a sitting president can’t be charged with a crime. But the policy doesn’t address whether a sitting president can be investigated, or whether that protection extends to investigations by non-federal law enforcement agencies. And although that policy remains in effect, it hasn’t been ruled on by a court or enacted into law by Congress.

In another case involving Trump’s records, the House Ways and Means Committee is trying to get six years of his tax records from the IRS. Trump also sued separately to block a New York law that would let Congress get his state tax returns.

Trump is also fighting subpoenas from other House committees that are trying to get financial information from Mazars, the president’s accounting firm, and from his bankers at Deutsche Bank AG and Capital One Financial Corp. Federal judges in New York and Washington have ruled against Trump in those two cases, and he’s appealing.

Congressional Democrats want to get hold of the records to investigate matters including Trump’s possible business ties to Russia and potential violations of the Constitution’s emoluments clauses, which curbs a president’s ability to take payments from foreign and domestic governments or officials.

Vance’s investigation is focused on determining whether business records were falsified to hide the nature of the payments to Daniels and McDougal, which were made before the 2016 presidential election. The Justice Department has for decades taken the position that the Constitution protects presidents from being charged criminally while in office. But the question of whether he can be probed by state authorities has never been tested in court.

A spokesman for Vance declined to comment.

The case is Trump v. Vance, 19-cv-08694, U.S. District Court, Southern District of New York (Manhattan).

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©2019 Bloomberg News

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