Tag: subpoena

President Trump’s Accountants Ordered to Turn Over His Financial Records to Congress (DC Circuit)

On 11 October 2019, the US Court of Appeals for DC Circuit ruled 2-1, in the case of Trump v. Mazars USA, LLPNo. 19-5142 (D.C. Cir. 2019), that President Trump’s accounting firm, Mazars USA, LLP, must turn over his financial records to the House of Representatives in accordance with a subpoena. The case runs in parallel to Trump v Vance Jr19‐3204 (2019) concerning a similar subpoena by a New York State prosecutor, discussed here.

In April 2019, the House Committee on Oversight and Reform subpoenaed President Trump’s financial records relating to years 2011 – 2018 from his accounting firm, Mazars USA, LLP. The subpoena was justified on the grounds that the Committee was investigating whether President Trump had committed any wrongdoing and also considering whether Congress should amend ethics in-government regulations. However, President Trump sued in a federal District Court seeking to block the subpoena arguing that it was part of a campaign of harassment conducted by the legislature against the executive and, therefore, served no legitimate legislative purpose. The District Court upheld the subpoena and President Trump appealed (p2).

The US Court of Appeals for DC Circuit first summarised the case law on the issue of enforceability of Congressional subpoenas, starting with the first case considered by the US Supreme Court, Kilbourn v. Thompson, 103 U.S. 168 (1881), where the Court invalidated a subpoena issued outside of a valid Congressional investigation (pp12-18).

Then, the US Court of Appeals for DC Circuit set the starting point – Congressional oversight powers were very broad. Nevertheless, they were also subject to important limitations. Firstly, “the power of Congress . . . to investigate” must be deemed “co-extensive with [its] power to legislate” (per Quinn v. United States, 349 U.S. 155 (1955) at 160). Consequently, “Congress may in exercising its investigative power neither usurp the other branches’ constitutionally designated functions nor violate individuals’ constitutionally protected rights.” Secondly, “Congress may investigate only those topics on which it could legislate” (per Quinn v. United States, 349 U.S. 155 (1955) at 161). Thirdly, “Congressional committees may subpoena only information ‘calculated to’ ‘materially aid’ their investigations” (per McGrain v. Daugherty, 273 U.S. 135 (1927) at 177) (p19).

At that point, the US Court of Appeals for DC Circuit emphasised that the case concerned a subpoena issued to President Trump’s accountant, not to the office of President of the United States directly, and, therefore, the case did not have involve the question of subpoenaing a sitting President. Consequently, the main question was “whether the Oversight Committee is pursuing a legislative, as opposed to a law-enforcement, objective.” (pp20-21).

In this respect, the US Court of Appeals for DC Circuit pointed out that “the fact that an investigation might expose criminal conduct does not transform a legislative inquiry into a law-enforcement endeavor” (per Sinclair v. United States, 279 U.S. 263 (1929) at 295). Furthermore, addressing President Trump’s claim that Congress was conducting a campaign of harassment against him, the Court explained that “in determining the legitimacy of a congressional act” Courts were not allowed to “look to the motives alleged to have prompted it” (per Eastland v. United States Servicemen’s Fund, 421 U.S. 491 (1975) at 508) (p22).

In order to determine whether the subpoena was issued pursuant to a legitimate legislative purpose, the US Court of Appeals for DC Circuit considered Chairman Cummings’s memorandum from 12 April 2019 where he set out the reasons behind the subpoena. The memorandum identified four questions that the subpoena would help answer:

  • “whether the President may have engaged in illegal conduct before and during his tenure in office”
  • “whether [the President] has undisclosed conflicts of interest that may impair his ability to make impartial policy decisions”
  • “whether [the President] is complying with the Emoluments Clauses of the Constitution”
  • “whether [the President] has accurately reported his finances to the Office of Government Ethics and other federal entities”

Furthermore, the subpoena was issued because “[t]he Committee’s interest in these matters informs [the Committee’s] review of multiple laws and legislative proposals under [its] jurisdiction.” In fact, at the time of the subpoena, the House of Representatives was working on a number of Bills that could benefit from the information supplied by President Trump’s accountants:

  • Bill H.R. 1 would require Presidents to include in their financial disclosures the liabilities and assets of any “corporation, company, firm, partnership, or other business enterprise in which” they or their immediate family members have “a significant financial interest
  • Bill H.R. 706 would require sitting Presidents and presidential candidates to “submit to the Federal Election Commission a copy of the individual’s income tax returns” for the preceding nine or ten years
  • Bill H.R. 745 “would amend the Ethics in Government Act to make the Director of the Office of Government Ethics removable only for cause” (pp25-27).

The US Court of Appeals for DC Circuit then held that the issues which were the subject matter of the legislation Congress was working on, were in fact subject to Congressional regulation. The Court, for instance, pointed to the the United States Code which contained a whole range of rules regulating Presidents’ finances and records. It also rejected President Trump’s claim that such regulation would unconstitutionally add further requirements for candidates seeking the office of the President of the United States, contrary to the judgments of the US Supreme Court in Powell v. McCormack, 395 U.S. 486 (1969), and U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779 (1995). Consequently, the Court found a valid legislative purpose related to matters which fell under the Congressional purview (pp36-45).

At the same time, the US Court of Appeals for DC Circuit rejected President Trump’s claim that the supposed legislative purpose was merely pretextual and the Committee was in fact engaged in a law-enforcement investigation. The Court held that Congress could investigate whether any criminal activity had taken place to inform itself what type of legislation it should pass to address such an activity (pp27-31).

Finally, the US Court of Appeals for DC Circuit found that the information sought by the subpoena in question was material to its legislative purpose. Even with information concerning financial records going back to 2011 (i.e. long before Mr Trump became the President of the United States), the Court held that the Committee had a legitimate interest in those records because, in theory, it could use them when deciding whether the Ethics in Government Act should require financial disclosure going back more than one year, as it was currently required (pp50-54).

Accordingly, the subpoena was upheld by the majority of the bench. However, Judge Roa dissented arguing that “when Congress seeks information about the President’s wrongdoing, it does not matter whether the investigation also has a legislative purpose. Investigations of impeachable offenses simply are not, and never have been, within Congress’s legislative power“. She argued that the subpoena could not be upheld because the Committee was investigating a sitting President (alongside exercising a legislative function), which could only be done through the impeachment process (pp1-3). Judge Roa pointed to the early practice as the best source of information as to what was permitted under the Constitution. “Founding Era practice confirms the Constitution’s original meaning—investigations of unlawful actions by an impeachable official cannot proceed through the legislative power” (p20). She agreed that “the cases cited by the majority demonstrate that during an investigation of private activity, the incidental revelation of criminal activity is tolerated when Congress has a legitimate legislative purpose,” however, the subpoena cited the investigation into a potential wrongdoing by President Trump as one of the main reasons behind it (p46). Consequently, she would have invalidated the subpoena as issued outside a valid legislative purpose.

The case of Trump v. Mazars USA, LLPNo. 19-5142 (D.C. Cir. 2019) was decided on partisan lines with Judges Tatel (appointed by President Clinton) and Millett (appointed by President Obama) voting against President Trump and Judge Roa (appointed by President Trump himself) voting in his favour. However, even beyond that, it is clearly visible from the majority and dissenting opinions that while the former put emphasis on the accountability of the executive branch as the overarching objective, the latter focused on the separation of powers as understood through the lenses of originalism.

The case of Trump v. Mazars USA, LLPNo. 19-5142 (D.C. Cir. 2019), like the case of Trump v Vance Jr19‐3204 (2019) decided by the US Court of Appeals for 2nd Circuit (discussed here), is part of a long dispute over President Trump’s financial records. With President Trump consistently refusing to release his tax returns, his political opponents have been attempting to obtain them by various legal routes, including subpoenas from the House of Representatives and a New York State Grand Jury. Both subpoenas have now been upheld by the US Courts of Appeals. However, the judgment in Trump v. Mazars USA, LLPNo. 19-5142 (D.C. Cir. 2019) will be appealed by requesting another hearing before an en benc panel of the US Court of Appeals for DC Circuit. Both cases could also be eventually appealed to the US Supreme Court.

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.