Why Is Trump Organization Under 'Criminal' Investigation?
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When New York’s Attorney General Grilled Eric Trump, Her Trump Organization Probe Was Civil. Now, It’s Criminal. What Changed?

Letitia James

With the Tuesday evening announcement that New York Attorney General Letitia James (D) is criminally investigating the Trump Organization, the 45th president’s home state has become uniquely unfriendly territory for him—with his chief business, associates and possibly even himself within the crosshairs of multiple Empire State prosecutors.

“We have informed the Trump Organization that our investigation into the organization is no longer purely civil in nature,” James’ spokesman Fabien Levy told Law&Crime in a statement. “We are now actively investigating the Trump Organization in a criminal capacity, along with the Manhattan D.A. We have no additional comment at this time.”

Though the legal community is divided about the significance of the announcement, unpacking the history of the attorney general’s probe helps to clarify matters.

When she revealed her probe on the eve of last year’s Republican National Convention, the attorney general said her office looked into whether the Trump Organization and former President Donald Trump himself improperly inflated the value of the ex-Commander in Chief’s assets on annual financial statements in order to secure loans and obtain economic and tax benefits. Her office has been looking at a number of Trump’s properties in that search: 40 Wall Street, Trump International Hotel and Tower Chicago, Trump National Golf Club – Los Angeles, and Seven Springs, a palatial 212-acre estate in Westchester. The attorney general’s investigation began in March 2019, and more than two years passed before James confirmed on Tuesday that what began as a civil probe has turned criminal.

When the attorney general’s office shifted gears remains unclear, but their lawyers told a judge late last year that their investigation was civil in order to secure the deposition of Eric Trump, who—in addition to being the ex-president’s son—serves as the president of Seven Springs LLC.

Last July, the Trump Organization resisted Eric Trump’s deposition after the attorney general’s office grilled the company’s longtime chief financial officer Allen Weisselberg, arguing that the questions were “beyond the scope” of a civil inquiry. (Weisselberg, one of the organization’s top lieutenants and a fierce loyalist of the former president, since emerged as a key figure in Manhattan District Attorney Cyrus Vance’s criminal probe into Trump.) After James’s office confirmed that there was no criminal investigation last autumn, a judge compelled Eric Trump’s deposition in late September, and the Trump son ultimately took the hot seat in October.

Since that time, the attorney general’s office has given Seven Springs a closer look, winning a ruling late last year to obtain documents from the estate’s engineer. In 1995, Trump Organization subsidiary Seven Springs LLC bought the estate for $7.5 million. Two decades later, Trump agreed to establish a “conservation easement” to provide a habitat for rare salamanders and bats in 2015, assessing the value of that property’s feature at $21.1 million the next year.

In December, James continued to dig into the validity of that claim. The case’s docket has not shown her team turning their attention to any other property since that time.

Ken White, a former prosecutor turned defense attorney and First Amendment advocate better known by his legal nom de plume “Popehat,” remained skeptical that major developments since that time triggered the attorney general’s announcement.

“It’s unimpressive,” White wrote in a text, referring to James’s announcement. “If they have only now decided they’re investigating criminally they are far behind everyone else. By most accounts their scope is fairly narrow, the [New York Attorney General’s] criminal prosecution power is limited, and the manner of the announcement sounds more ‘we take things seriously’ and less ‘we’re riding in with indictments.'”

Former Southern District of New York prosecutor Jennifer Rodgers cautioned against writing off the announcement just yet.

“The AG investigation has been going on for some time, so I’m not surprised there would be useful stuff there,” Rodgers told Law&Crime in a text message. “The question is what prompted them to start discussing joining forces with the DA?”

Manhattan District Attorney Vance’s investigation, which has made recent headlines far more frequently than the attorney general’s probe, turned a corner early this year after finally obtaining Trump’s tax records after two protracted Supreme Court battles. Both New York prosecutors reportedly have been coordinating since that time—and not only on Trump matters.

“It may not be blockbuster, but it is enough to have made the DA agree to join forces,” Rodgers said. “There’s no reason other than solid and helpful evidence why the DA would bring the AG into their case.”

As for the limitations of the attorney general’s office, Rodgers said: “The AG has a lot of power under the Martin Act to prosecute public companies, but that wouldn’t apply to Trump Org.”

Rodgers noted that could be another reason the Manhattan District Attorney and New York Attorney General have been working together.

On Wednesday morning, Trump reacted to the news in a meandering, 900-plus word fusillade on his website.

“There is nothing more corrupt than an investigation that is in desperate search of a crime,” Trump’s post reads. “But, make no mistake, that is exactly what is happening here.”

Trump then rattled off a series of statements James made on the campaign trail, quoting the then-candidate vowing to probe “every aspect” of his real estate dealings and boasting that she would “definitely sue” him.

“She declared, ‘just wait until I’m in the Attorney General’s office,’ and, ‘I’ve got my eyes on Trump Tower,'” Trump wrote.

Unlike the typically discreet Manhattan DA Vance, James devoted much of her preelection pitch to targeting Trump for a variety of alleged misconduct—a running theme of a video editorial that she ran on the viral news organization, NowThis. This combative style toward real and perceived adversaries of the political left has complicated matters for James before, notably in her lawsuit to shut down the National Rifle Association. The statements provided fodder for repeated claims of political prosecution.

In a strange-bedfellows development, the American Civil Liberties Union’s national legal director took the NRA’s side in the dispute when James brought that suit in August 2018. The rights group alleged a possible First Amendment violation, an argument made more plausible by James labeling the NRA a “terrorist organization.” The attorney general’s office has consistently argued that their lawsuit is a straightforward application of New York charity law, and the NRA’s efforts to dismiss the case have failed. But the NRA, and now Trump, have brought up James’s comments at every turn after her office made good on heated campaign rhetoric to scrutinize them.

Unlike her campaign rhetoric, James’s actions have been relatively restrained. Her Trump Organization investigation has played out for years—more than half that time, secretly—before the recent announcement about its escalation.

In between shots at the attorney general, Trump’s stream-of-consciousness statement boasted about the Space Force and COVID-19 vaccine development, while complaining about a variety of grievances, from the Russia investigation to his impeachments.

Update—May 19 at 12:40 p.m. Central Time: This story has been updated to include Trump’s statement and relevant context.

(Photo via Joshua Rashaad McFadden/Getty Images)

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Law&Crime's senior investigative reporter and editor Adam Klasfeld has spent more than a decade on the legal beat. Previously a reporter for Courthouse News, he has appeared as a guest on MSNBC, BBC, NPR, PBS, Sky News, and other networks.