New York State Should Investigate Trump Organization (plus an argument for either the feds or state prosecutors to indict)

My op-ed in the New York Times on Monday, March 11 is here.  I am happy to report that the New York attorney general later that day issued a series of crucial subpoenas to DeutscheBank related to the fraud Michael Cohen reported in his House testimony, and also related to older loans which may or may not address long-standing suspicions of money laundering of illegal Russian assets through DeutscheBank (the only western bank that would continue loaning money to Trump after his many bankruptcies, and a bank that has been criminally fined for laundering enormous amounts of illegal Russian money).

I note that Attorney General James had only been in office for about two months, and surely been working on those subpoenas before my op-ed, so I am not suggesting a causal link, just noting my appreciation that she is making up for former and disgraced Attorney General Eric Schneiderman’s dereliction of duty on many of these matters. It is, um,  concerning that Eric Schneiderman did not take this step in his time in office, and that delay – while Congress was held by Republicans blocking such investigations – may have permanent consequences. Barbara Underwood had only a short time as Acting AG, and to her credit, she also did something that Schneiderman failed to do: file for the Trump Foundation’s dissolution with state supervision of its assets. This move succeeded and sets the stage for further investigation.  These steps by Underwood and James are  important pieces of larger process of bringing Trump to justice.

My op-ed is behind a paywall. I am going to focus on a few main points:

“The public record establishes probable cause for campaign finance felonies, and a potential case for criminal tax fraud, bank fraudinsurance fraud and suborning perjury to hide shady business dealings — a staggering mix of state and federal crimes implicating a range of Trump Organization officials.

State attorneys general — especially New York Attorney General Letitia James — should not wait for any Justice Department official to hold Trump accountable for potential crimes. They also do not need to wait to build a case for criminal indictments. The appropriate immediate path is a special state civil proceeding against the Trump Organization and its officials.

Legal status as a corporation endows businesses like the Trump Organization with great powers, and with those powers come specific responsibilities. To police these privileges, almost every state in the country has a statute that gives its attorney general the power to bring civil actions to investigate corporations for fraud and to go to court to dissolve the ones that persistently break the law. This statutory power descended from an old English proceeding called “quo warranto,” meaning “by what authority do you exercise legal power?” The question in this case is whether the Trump Organization has so abused its privileges that it has lost this legal authority.

The Trump Organization is incorporated only in New York and Delaware, so New York officials have a unique role and responsibility. New York attorneys general have not used their power to dissolve corporations often, but as recently as 1994, they brought a civil action leading to the dissolution of a fraudulent entity. New York’s highest court has described this remedy of civil dissolution as a “judgment of corporate death,” and for the state to invoke such a corporate death penalty, the corporation’s “transgressions” must not be merely incidental, but “material and serious; and such as to harm or menace the public welfare.”

If a state civil investigation turned up more evidence of criminal fraud, state and federal prosecutors could use these findings to indict the Trump Organization and its officials, including Mr. Weisselberg.

In addition to allegations of campaign finance felonies, Mr. Cohen also alleged that Mr. Weisselberg, along with the Trump Organization officials Mr. Lieberman and Mr. Calamari, engaged in insurance fraud, bank fraud and tax fraud by dishonestly inflating and then deflating the valuation of Trump assets for insurance, banking and tax advantages. Keep in mind that the Southern District of New York, when it was headed by Rudolph Giuliani in 1988, indicted a state legislator for overvaluing property and submitting false financial statements…

Mr. Weisselberg is more likely to cooperate if the New York attorney general and state prosecutors have already begun to investigate his conduct. President Trump cannot use a pardon to rescue Mr. Weisselberg from state prosecution; presidential pardons do not affect state criminal liability. Moreover, unlike federal prosecutors at the Southern District of New York or in Robert Mueller’s office, Mr. Trump cannot fire or interfere with them.

The window for these prosecutions to move forward is closing. The states are a complementary law enforcement system, and they can do what Mr. Mueller might not be able to do: Send a message that the president is not above the rule of law.

This state investigation might turn up evidence that President Trump committed crimes himself. If the Justice Department will not indict a sitting president, we must ask what is worse: the potential distraction of states indicting presidents, or the crisis for the rule of law of presidential immunity, especially during a re-election when those crimes may recur with the goal of four more years of impunity. If the specter of state indictments is unsettling, that is a reason to allow federal prosecutors to bring indictments instead, perhaps building on state officials’ findings.

Indictments, even if trials are long delayed, at least serve an important message from law enforcement to society about legal norms. Even if justice is delayed, no one will be above the law.”

Can Congress Subpoena the Trump-Putin Translator? Thinking 4-dimensionally about 3 branches

I’m stuck in bed with some kind of unpleasant bug this morning, so if my approach here is nuts, chalk it up to the bug.  And I had a hard time sleeping last night, not only because of the bug, but because of this outrageous story:

“President Trump has gone to extraordinary lengths to conceal details of his conversations with Russian President Vladi­mir Putin, including on at least one occasion taking possession of the notes of his own interpreter and instructing the linguist not to discuss what had transpired with other administration officials, current and former U.S. officials said.”

There is a robust debate about whether the House or Mueller can subpoena the translator or whether Trump could invoke executive privilege. On the one hand, the Supreme Court in U.S. v. Nixon clearly approached executive privilege as a balancing test, not a blanket rule.

On the other hand, dicta in U.S. v. Nixon indicate a special protection of diplomatic/foreign executive communication, and Eric Columbus flagged this remarkable twist: an OLC opinion recognizing this concern was written by AG nominee Bill Barr. See Eric’s thoughtful thread here. The counterargument is that these circumstances are so extraordinary, and the basis for suspicion of criminal conduct are so valid, that the normal rules no longer apply.

I have thought about the balance of these two positions, and how to make sense of them through the lens of separation of powers. I think one answer is to think four-dimensionally about the three branches, meaning that they work out stages over a sequence of time back-and-forth.

  1. In ordinary circumstances with normal presidents, privilege applies.

In the US v. Nixon balance, one would need some strong reason to override executive privilege in regular White House communications, but especially extraordinary circumstances to override privilege in dlplomatic/foreign national security communications

2. What kinds of especially extraordinary circumstances? When there is already existing evidence of gross maladministration/misconduct/potential criminal conduct, fiduciary misdemeanors of self-serving conduct. In short, one would need evidence of some level of high crimes or high misdemeanors to pierce the privilege in diplomatic/foreign contacts.

3. And now, we have that evidence in spades.

4. Once we have that level of evidence, the appropriate process under our Constitution is impeachment and removal. That process might be necessary before overriding executive privilege.

5. The Court might say something like this: “This is a close case. But rather than have the judiciary intrude on the executive branch’s privileges when we have sufficient evidence of misdemeanor (or worse), let’s follow constitutional structure of impeachment first. Give the political branches the opportunity to address this sufficient evidence first.”

7. By January 2020, it’s no longer an impeachment/removal case. It becomes a criminal investigation. (And I’ve explained recently in Slate why prosecutors must be able to indict a sitting president: many crimes have statutes of limitations that would run out in a first or second term, and there is no such thing as equitable tolling of criminal statutes).
9: Message from Court: We are going to give the political branches the first opportunity to address probable cause of high crimes and misdemeanors, without crossing into executive privielge. But Senate, don’t make us have to step in. If you, the Senate, are so dysfunctional, partisan or corrupt to do your job, we will be forced to take extraordinary measures.

Qui Tam like Agnew: Could you, a taxpayer, sue Trump and family for fraud? [Updated]

Ok, so after helping my wife and kids get onto the ski hill on Christmas, I’m back in our rental condo, listening to podcasts while walking the dog and reading about old English writs that might apply to Trump. Seriously. I’m having the most fun: using English legal history as a strategy to hold the madness of King Donald accountable.

I listened to Rachel Maddow’s podcast “Bag Man” on the rise and fall of Spiro Agnew, and it’s absolutely a must-listen. Spoiler: Agnew resigned in 1973. Second spoiler: he pleaded no contest, served no jail time, and kept his bribes. But I was particularly intrigued in Episode 6 by the interview with George Washington Law Professor John Banzhaf, famous for activist public-interest litigation, and the students from his class (John McMillan, Reina Chassy and Suzanne Saul) who brought a private citizen taxpayer lawsuit against Agnew and two co-conspirators in 1976 (third spoiler…) and won.  In 1982, in Agnew v. State, 51 Md.App. 614, 446 A.2d 425,  a Maryland appellate court upheld the lower court order for Agnew to repay the state of Maryland about $250,000. (Bonus trivia: Diana Motz was on the brief for Maryland as the assistant attorney general, before she became esteemed and Honorable Judge Motz on the 4th Circuit). Here are two Washington Post stories here and here. If you read that Agnew might get a tax deduction for these repayments, note that he did not get a big state tax refund for these repayments.

The Maddow podcast explains that these student/taxpayers used an old civil proceeding from English law, but understandably doesn’t specify on the podcast. NBC provides sourcing here (but some of it is pay-walled). The available court records and news reports don’t provide such details – perhaps because that old English proceeding was codified into statute. But I have a feeling they are talking about qui tam. Should we start talking about it again?

Continue reading “Qui Tam like Agnew: Could you, a taxpayer, sue Trump and family for fraud? [Updated]”

More Questions about Kushner, Qatar, and Quid pro Quo (Brookfield + Apollo)

I’ve been connecting the dots between Kushner’s $1.8 billion crisis called 666 5th Ave., the Russian sale of Rosneft to Qatar, and his dealings with Qatar, Apollo, and Brookfield.

New news: Brookfield, the Canadian real estate giant with links to Qatar and UAE, lacked the cash to complete its implausibly generous purchase of 666 5th Ave. Guess who is providing the cash?

Apollo Global Management, the firm with Qatar ties that gave the Kushners a massive $184 million loan in Nov. 2017, months after the Saudis and UAE lifted a dangerous blockade from Qatar. Story here. They are assisting Kushner’s deal with over $300 million in a mezzanine loan.

Much more on this below. First, some background.

I’ve written this outline of the Kushner connections for Slate, on Cohen for Slate, and I have a long timeline with public sourced links here.

Here is a brief timeline:

Russia’s sale of Rosneft Gas is the key event in the Steele Dossier’s quid pro quo allegation. On June 2016, Russians allegedly offer Trump associates a massive payout derived from the commissions on Russia’s sale of 19.5% of state energy giant Rosneft ($11 billion), in return for lifting sanctions.

Dec. 1st, 2016, a month after the election: Flynn and Kushner seek to create secret backchannel with Kislyak to the Kremlin in contact with Russian officials.

Dec. 8th, 2016: Russia sells a 19.5% stake in Rosneft in a concealed deal, eventually revealed to be with Qatar (and Glencore). Immediately after the deal, a Qatari diplomat allegedly met with Cohen and Flynn at Trump Tower.

In January 2017, the Dossier is published. In the next few months, Kushner sought money directly from Qatar to bail out his real estate problem, but Qatar declines. It is possible that Qatar was backing off of the deal, wary of its exposure from the Dossier. In April 2017, Kushner reportedly escalated a Gulf state crisis against Qatar with a blockade and a risk of regional war.

Nov. 2017: the Qatar-backed Apollo Group delivered $184 million to Kushner, and a real estate fund linked to Qatar is in negotiations to bail out Kushner’s $1.8 billion disaster at 666 5th Ave.

May 2018: Kushners have a deal with Brookfield to purchase 666 5th Ave. Qatar is the largest outside investor in Brookfield, often with subdeals in which Qatar takes on more control and risk. Brookfield has ties to UAE. The terms of the deal are implausibly favorable, considering that there was no market for the 666 Albatross. Some analysis for why it’s so generous to Kushner here and here.

I’ve discussed Brookfield’s links to Qatar and UAE here. Wendy Siegelman has detailed how BPY structures some deals to give Qatar more control and risk.

Here is the new reporting I’m pulling together:

First, Brookfield’s 666 deal is being financed by $300 million from Apollo.

Second, Apollo has apparent ties to UAE (Abu Dhabi), as well as Qatar:

Apollo chief says sold nine percent of firm to Abu Dhabi. Reuters, November 7, 2007: “In November 2007, Apollo was able to realize additional value from the sale of a 9% ownership interest in its management company to the Abu Dhabi Investment Authority(ADIA).

Third, here is reporting from August 2017 on the financial ties between Apollo and Qatar in Manhattan real estate deals:

Qatar’s sovereign wealth is quietly backing Michael Stern and Kevin Maloney’s supertall condo development at 111 West 57th Street, The Real Deal has learned. The wealthy Middle Eastern country’s investment arm, the Qatar Investment Authority, holds $161.5 million in mezzanine debt on the under-construction luxury project.

The QIA investment comes to light as the developers are locked in a high-stakes legal dispute with their equity partner, Ambase Corporation. But the investment itself dates back to 2015: In June of that year, the developers landed a $400 million senior construction loan from AIG and a $325 million mezzanine loan from Apollo Commercial Real Estate Finance, a real estate investment trust managed by private equity firm Apollo Global Management. In the fourth quarter of 2015, the Apollo-controlled REIT sold off a $50 million portion of the mezzanine loan to other Apollo debt funds and a $200 million portion to an Apollo fund managing QIA’s money, keeping $75 million on its own books, according to sources familiar with the moves and public records. The deal made QIA the second-biggest investor in the project behind AIG…

The mezzanine loan is out of balance, and the developers are trying to raise additional capital to pay for what sources said were cost overruns.

QIA’s involvement in the tower underscores Qatar’s emergence as a major New York real estate investor. The sovereign wealth fund also owns a stake in Brookfield Property Partners’ Manhattan West project and last year bought $622 million worth of shares in Empire State Realty Trust.  Meanwhile a former QIA head, Sheikh Hamad Bin Jassim Bin Jaber al-Thani, is an investor in Harry Macklowe’s condo conversion project One Wall Street and the retail portion of 432 Park Avenue. The billionaire, known as HBJ, also reportedly came close to investing $500 million in Kushner Companies’ planned redevelopment of 666 Fifth Avenue.

In 2015, QIA said it planned to invest $35 billion in the U.S. over the next five years.  Qatar is now in the midst of a diplomatic crisis with its neighbors in the Gulf, including Saudi Arabia and the United Arab Emirates, that could threaten the health of its economy.

Fourth, here is a Bloomberg story on Qatar backing Apollo in 2015:

Qatar’s sovereign wealth fund, which plans to invest $35 billion in the U.S. in the next five years, is backing a commercial real estate investment trust run by a subsidiary of Leon Black’s Apollo Global Management LLC.

The Qatar Investment Authority bought 8.82 million common shares of Apollo Commercial Real Estate Finance Inc. on Sept. 18, according to documents filed on Monday with the U.S. Securities and Exchange Commission. The REIT announced on Sept. 21 that it sold these shares at $17 each for a total of $150 million, and that it raised another $198 million from the same unidentified investor through preferred stock sales.

Fifth, here is a 2015 SEC filing showing Apollo’s purchase agreement with Qatar Investment Authority, and a related article in Reuters.

Sixth, here is a $5.6 billion deal from summer 2018 involving Apollo and Qatar:

PSP Investments Credit USA LLC and an affiliate of Qatar Investment Authority will also provide part of the debt financing.

Seventh: Senator Blumenthal called for an investigation last March of Kushner and Apollo:

Mr. Kushner reportedly met repeatedly with Mr. Joshua Harris, of Apollo Global Management and an outside adviser on the Trump Administration’s multi-billion dollar effort to privatize public infrastructure. The true nature and content of those discussions are not public. But they unquestionably present the appearance of unethical conduct, given the subsequent $184 million loan facilitated by the Apollo Group Management to Mr. Kushner’s family real estate firm. The timely loan provided funds sourced from the government of Qatar. The financial transaction reportedly enabled Kushner Companies to withdraw equity to meet other debt obligations and maintain ownership of the 225 W. Randolph St. office building in Chicago, when a prior loan from another lender was about to expire and they had previously been unable to sell the property.
Eighth: One key here is the hidden option for BPY to buy the real estate.
BPY is paying $1.3 for just the 99-year lease. What about the ownership of the actual land? How much would they have to pay to exercise that option? If that’s a large number, the deal is even more implausibly generous.
COMING NEXT:
What’s in it for Brookfield? 
A carrot?
In addition to Qatar and UAE being behind-the-scenes question marks, Brookfield owns 100% Westinghouse, which has a major investment in nuclear maintenance and nuclear plant retirement contracts…
What could Brookfield and Westinghouse possibly want from friends in government?
But I’m concerned about a stick. Does anyone have leverage over Brookfield? Financially, civilly, or criminally?

A prosecutor must be able to indict a sitting president: the OLC’s “equitable tolling” problem

My new Slate piece, with big thanks to a bunch of smart legal scholars and TwitterLaw friends:

Last week, prosecutors in the U.S. District Court for the Southern District of New York alleged in court filings that Donald Trump directed his former personal attorney, Michael Cohen, to make hush money payments that violated campaign finance laws. The prosecutors recommended serious prison time for Cohen, and commentators remarked widely that Trump could be facing his own indictment if he were not president, because the Department of Justice has a policy of not indicting a sitting president. But this news highlights a major problem with this policy: statutes of limitations. The intractability of that problem is a compelling argument for why prosecutors must be able to indict a sitting president. Otherwise, a president could escape prosecution for many felonies by running out the clock.

The campaign finance felony Trump may have directed has a five-year statute of limitations, after which time a defendant cannot be tried if he has not been indicted. What if President Trump wins a second term?

Link to read more here.

Slate: Whitaker should learn from Nixon’s lawyers: If you obstruct for a corrupt president, you go to jail

My latest in Slate, as we are still waiting for any Flynn documents tonight:

As one of the co-authors of an amicus brief challenging President Donald Trump’s appointment of Matthew Whitaker as acting attorney general, I believe that Whitaker’s appointment as a “department head,” bypassing the Department of Justice’s Senate-confirmed officers, violates the appointments clause of the Constitution. That has not stopped Whitaker from taking the job. With this power, Whitaker could obstruct the Russia investigation in many ways. The glaring legal problem for Whitaker—in addition to the illegitimacy of the appointment itself—is that any step he takes to slow or impede special counsel Robert Mueller’s investigation potentially could lead to an obstruction or bribery conspiracy charge against him, even if an attorney general would ordinarily have the power to make such moves. In case he is ever tempted to obstruct the Russia probe on the president’s behalf, Whitaker would be wise to study the history of Nixon’s two attorneys general and six other lawyers indicted for participating in Nixon’s legal scandals and what became of them.

Read link for more here. (I’ll be on Lawrence on MSNBC to discuss tonight, 10 pm)

Bush Sr. was a better president than Clinton was

I posted a short tweet that annoyed a lot of people, apparently:

I could make a case that George HW Bush was solidly one of the 10 best presidents all time. The man he lost to was solidly not. We should mourn Bush and the passing of his version of the GOP, replaced by the Confederacy of Dunces – from his son directly to Trumpism.

I’m a proud liberal who cast his first vote for Clinton over Bush, voted for Clinton over Dole, was an early Obama supporter, and voted for Bernie. Here’s my super-concise bottom line: I’ll take a moderate Republican whose signature legislative accomplishment was a bipartisan tax-raising budget deal and whose signature foreign policy achievements were ably managing the end of Cold War and then a well-executed multi-lateral coalition war that did not lead to a disaster…

…over a conservative Democrat, most of whose long-term achievements were cynically conservative, had a mixed foreign policy record, decisively lost Congress (the first time the GOP took the House since [correction: 1953]), and became only the second president to be impeached in U.S. history — for some incredibly stupid conduct, which made his second term a totally wasted four years.

Here are the best things Clinton did with long-term impact:

  1. RBG and Breyer
  2. The 1993 budget deal, which moved towards balanced budgets with tax increases, and navigated through the conservative Dems in Congress.
  3. Oslo and the peace process in Israel/Palestine, but that ultimately collapsed
  4. CHIP.

But Clinton’s domestic accomplishments were markedly conservative, and people forget just how bad the legislative record was, just off the top of my head. Keep in mind that blew the health care opportunity with hubris and chaos, and then turned sharp right:

  1. Welfare “reform.” (Cutting families off).
  2. AEDPA death penalty expansion and habeas restriction.
  3. A terrible anti-immigration law IIRIRA. A terrible law to get himself re-elected.
  4. The Prison Litigation Reform Act. Dreadful.
  5. The Crime Bill of 1994, with gun control on the positive side, but some right-wing compromises. And it was billed by the framing of “super-predators” as a coded racist dog-whistles. Not nearly as bad as Willy Horton, but still.
  6. Don’t Ask Don’t Tell (exec order) and anti-gay marriage DOMA

Foreign policy other than Israel/Palestine was disappointing. Rwanda, Somalia, delayed intervention in Bosnia/Herzegovina.

And then there’s Whitewater, perjury, obstruction of justice, and impeachment. We can agree that Ken Starr was an abusive partisan hack, but Clinton recklessly opened himself up to all of it.

Now for Bush Sr. There is a LOT not to like, too. I’ll grant that the Willie Horton ad was a low point in American politics. Clinton used race in his 1992 campaign, too, to marginalize Jesse Jackson for political points, but it is nothing compare to Willie Horton. So I fully concede that terrible mark against Bush. And there’s Clarence Thomas. And I’ll admit that Souter was a happy accident.

But I’ll take Bush’s bipartisanship and multi-lateral foreign policy success over Clinton’s record. Bush’s 1990 budget deal moved towards deficit reduction relying mostly on Democratic votes. The bill passed the Senate 54-45, with 35 Democratic votes! Stunning compromise. And Bush was punished for it by increasingly ideological GOP leaders and voters.

Bush also managed two foreign policy challenges with deft multilateralism: the end of Soviet Union and the Iraq War. Was the Iraq War avoidable? Maybe. But once the crisis hit, he built an international coalition, won decisively, and then — here’s the key — he avoided the disaster that his son created by pulling back against Gen. Schwartzkopf’s push to march to Baghdad, a tough call, but the right call. And a really important call.

Bush also took steps to push Israel towards peace negotiations, too (opposing the finance of new settlements).

And Bush did not get himself impeached.

Did Bush have some right-wing policies? Some, but I think we should appreciate the lost species of the moderate Republican, and not forget how Clinton appropriated so many right-wing policies himself. Did Bush have some ethical challenges (pardon Weinberger?). Sure, but fewer relative to most presidents.

So yes, I’d rank Bush above Clinton. Solidly.