Tag: Mazars

President Trump’s Accountants Ordered to Turn Over His Tax Records to NY Prosecutor (2nd Circuit)

On 4 November 2019, the US Court of Appeals for the 2nd Circuit ruled unanimously, in the case of Trump v Vance Jr19‐3204 (2019), that Mazars USA LLP, a firm which handles President Trump’s taxes, must turn over his tax records to Mr Vance Jr, who is the District Attorney of New York County, as part of an ongoing Grand Jury investigation. The case runs in parallel to the proceedings before the US Court of Appeals for the District of Columbia Circuit in Trump v. Mazars USA, LLP, No. 19-5142 (D.C. Cir. 2019) concerning a similar subpoena issued by the House of Representatives.

The District Attorney of the County of New York is currently pursuing investigation which “targets New York conduct and has yet to conclude as to specific charges or defendants” and, as part of that investigation, in August 2019, he served subpoenas on behalf of the Grand Jury on the Trump Organization and Mazars USA LLP. The subpoenas sought records, including tax records, relating to suspected ‘hush money’ payments made to two women between June 2015 and September 2018 (pp4-7).

In September 2019, President Trump sued in the District Court for the Southern District of New York seeking injunction against the subpoena on the basis of a presidential immunity from State criminal process. President Trump argued that his accountants must be barred from producing any records without his consent until the he is no longer in office. In October 2019, the District Court ruled that it had no jurisdiction to hear the case under the doctrine of federal abstention per Younger v. Harris, 401 U.S. 37 (1971) and the case was dismissed (pp7-8). President Trump appealed to the US Court of Appeals for the 2nd Circuit.

The US Court of Appeals for the 2nd Circuit first dealt with the federal abstention doctrine. The doctrine kicks in when a claim is brought before a federal Court while there are ongoing proceedings before a State Court concerning the same subject matter. In those circumstances, the case of Younger v. Harris, 401 U.S. 37 (1971), “preclude[s] federal intrusion into ongoing state criminal prosecutions. Second, certain civil enforcement proceedings warrant abstention. Finally, federal courts [must] refrain from interfering with pending civil proceedings involving certain orders uniquely in furtherance of the state courts’ ability to perform their judicial functions” (per Sprint Commc’ns, Inc. v. Jacobs, 571 U.S. 69, 72 (2013)). However, the US Court of Appeals for the 2nd Circuit pointed to an exception to federal abstention where a federal actor is involved in the proceedings claiming that “allowing federal actors to access federal courts is ‘preferable in the context of healthy federal‐state relations’” (per Leiter Minerals, Inc. v. United States, 352 U.S. 220, 226 (1957)) (pp9-13).

Having established the it had jurisdiction, the Court moved to consider whether “presidential immunity does [or does] not bar the enforcement of a state grand jury subpoena directing a third party to produce non‐privileged material, even when the subject matter under investigation pertains to the President.” The Court examined historical precedents concerning subpoenas served on Presidents, including a subpoena issued to President Jefferson by Chief Justice Marshall, sitting as the trial judge, in the prosecution of Aaron Burr in 1807 (United States v. Burr, 25 F. Cas. 30, 34–35 (C.C.D. Va. 1807) (No. 14,692D)), and a subpoena for samples served on President Clinton in the Lewinski inquiry (Clinton v. Jones, 520 U.S. 681, 703 (1997)). However, the Court focused primarily on the case of United States v. Nixon, 418 U.S. 683 (1974) where President Nixon was subpoenaed to “produce certain tape recordings and documents relating to his conversations with aides and advisers” to be used a criminal trial of his advisers. In this case, the US Supreme Court held unanimously that such communications were not privileged materials and that the separation of powers did not “insulate a President from a judicial subpoena in an ongoing criminal prosecution” (pp17-22).

The US Court of Appeals for the 2nd Circuit also distinguished between producing written materials and more direct forms of participating in judicial proceedings. It held that “historical practice suggests that a court may not compel the President to personally attend trial or give live testimony in open court” (per Clinton v. Jones, 520 U.S. 681, 703 (1997)) and is not “liable to arrest, imprisonment, or detention, while he is in the discharge of the duties of his office” (per Harlow v. Fitzgerald, 457 U.S. 800 (1982)). However, neither of those examples applied in the case of President Trump (pp22-23).

Furthermore, the Court rejected President Trump’s argument that his “case is distinguishable from Nixon and related cases because this subpoena comes from a state rather than a federal court.” It held that the subpoena did not involve “direct control by a state court over the President”, it did not interfere with his duty
to faithfully execute the laws under Article II of the Constitution, nor did it subordinate federal law in favor of a state process (p24). Finally, the Court also rejected President Trump’s argument that his “case is unlike Nixon because he is a ‘target’ of the investigation, which carries a ‘distinctive and serious stigma’ that is not present when the President is merely a witness in another person’s trial.” The Court held that the subpoena was part of nothing more than a Grand Jury investigation which had not, so far, resulted in any criminal charges and was not directed at President Trump specifically. Nevertheless, the Court ruled that “even assuming, without deciding, that a formal criminal charge against the President carries a stigma too great for the Constitution to tolerate, we cannot conclude that mere investigation is so debilitating” (p25). Consequently, the Grand Jury subpoena for President Trump’s tax record was upheld.

The overall scope of the judgement in Trump v Vance Jr19‐3204 (2019) is rather narrow as it only concerns 3rd party evidence subpoenaed by a Grand Jury. In fact, in its judgment, the US Court of Appeals for the 2nd Circuit does not address some wider principles concerning Presidential immunity. In the end, the Court held that “the President may be correct that state courts lack the authority to issue him orders—a question we have no need to address today—that provides no basis to enjoin the enforcement of a subpoena issued to a third party simply because the President is implicated in the subject matter of the investigation” (p25). Nor did the Court address the question whether a sitting President could be subject to a criminal trial. However, it ruled that “there is no obvious reason why a state could not begin to investigate a President during his term and, with the information secured during that search, ultimately determine to prosecute him after he leaves office” (p28).

The case of Trump v Vance Jr19‐3204 (2019) is yet another case concerning the issue of President Trump’s tax records. With President Trump consistently refusing to release his tax returns, his political opponents have been attempting to obtain them by various legal routes, one of which is a Grand Jury investigation in the State of New York. Another route was taken by the House of Representatives which issued its own subpoenas, upheld in October 2019 by the US Court of Appeals for the District of Columbia Circuit in Trump v. Mazars USA, LLP, No. 19-5142 (D.C. Cir. 2019). Both cases could now be appealed to the Supreme Court or reheard by en benc benches.