What's at stake in Supreme Court fight over Trump financial records
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[May 11, 2020]
By Lawrence Hurley and Matt Scuffham
WASHINGTON (Reuters) - The U.S. Supreme
Court on Tuesday considers three blockbuster cases concerning efforts by
the Democratic-led House of Representatives and a grand jury working
with a prosecutor in New York City to obtain copies of President Donald
Trump's financial records.
Unlike recent presidents, Trump has refused to disclose his tax returns
and other materials that would shed light on the scope of his wealth and
his family-run real estate business. The cases test the limits of
presidential power in relation to Congress and state prosecutors.
Here is a look at what is at stake in the cases.
What are the three cases?
Two of the three cases concern attempts by House committees to enforce
subpoenas seeking Trump's financial records from three businesses:
Trump's longtime accounting firm Mazars LLP and two banks, Deutsche
Bank<DBKGn.DE> and Capital One<COF.N>.
The Supreme Court has consolidated these two cases and will hear them
together in a scheduled one-hour argument.
The other case concerns another subpoena issued to Mazars for similar
information, including tax returns, but this one was issued as part of a
grand jury investigation into Trump being carried out in New York City.
The justices will hear a second one-hour oral argument in this case.
Rulings are due by the end of June.
In all three cases, lower courts in Washington and New York ruled
against Trump.
What does the House subpoena to Mazars seek?
The House Oversight Committee in April 2019 issued a subpoena to Mazars
seeking eight years of accounting and other financial information in
response to the testimony before Congress of Michael Cohen, Trump's
former lawyer. Cohen said that Trump had inflated and deflated certain
assets on financial statements between 2011 and 2013 in part to reduce
his real estate taxes. The committee said it wanted to find out whether
illegal actions had taken place. Cohen was sentenced to prison after
pleading guilty to charges including violating campaign finance law,
bank fraud, tax evasion and lying to Congress.
What about the House subpoenas to the banks?
The House Financial Services Committee has been examining possible money
laundering in U.S. property deals involving Trump. In a separate
investigation, the House Intelligence Committee is investigating whether
Trump's dealings left him subject to the influence of foreign
individuals or governments.
The two committees issued 12-page subpoenas in April 2019 requiring
Deutsche Bank to hand over the banking records of Trump, his children
and his businesses. Lawmakers requested documents that identify "any
financial relationship, transaction or ties" between Trump, his family
members and "any foreign individual, entity or government," according to
the subpoena.
Investigators hope the records will reveal whether there are any
financial links between Trump and Russia's government, sources familiar
with the probe said. That would include whether any loans to Trump by
Deutsche Bank were back-stopped by Russian entities - a financial
arrangement that can be considered a form of insurance, the sources
said.
Senior sources within Deutsche Bank have denied any Russian connections
to loans it made to Trump.
Deutsche Bank was the only major lender to conduct business with Trump
in recent years - doing so despite the fact that he defaulted on loans
worth hundreds of millions of dollars the German bank made to him
between 2004 and 2008.
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President Donald Trump reacts during a campaign rally in Charlotte,
North Carolina, U.S., March 2, 2020. REUTERS/Carlos Barria
At the time of his January 2017 inauguration, Trump owed Deutsche
Bank around $350 million, according to sources. Many of the loans
were granted through Deutsche Bank's New York-based private banking
division, which also lent to Trump's son-in-law and adviser Jared
Kushner.
The Financial Services Committee also issued a subpoena to Capital
One, which also had maintained a long-term relationship with Trump
and has come under scrutiny for some of its business practices.
What is at stake in the House subpoenas cases?
If Trump loses, the material would need to be handed over to
Democratic lawmakers, most likely before the Nov. 3 election in
which Trump is seeking a second four-year term. The ruling would
make clear that a president, at least when it comes to information
held by third parties, cannot block House subpoenas.
Trump's lawyers have advanced several arguments, including that
Congress had no authority to issue the subpoenas, a broad assertion
of presidential power. No sitting president has ever had his
personal records subpoenaed, they said. They also said that even if
Congress could issue the subpoenas, it lacked a valid legislative
reason for doing so and had not stated with sufficient detail why it
needed the documents.
If the court were to embrace Trump's broadest arguments, it would
severely weaken the ability of Congress to conduct oversight of a
president.
What is the New York prosecutor investigating?
The office of Manhattan District Attorney Cyrus Vance, a Democrat,
in September 2019 sought nearly a decade of tax returns. It is part
of a criminal investigation that began in 2018 into Trump and the
Trump Organization, the president's family real estate business,
spurred by disclosures of hush payments made to two women who said
they had past sexual relationships with him. Those women are
pornographic film actress Stormy Daniels and former Playboy model
Karen McDougal. Trump and his aides have denied the relationships.
What is at stake in the New York case?
Trump's lawyers argue that his records cannot be handed over because
of his authority as president under the Constitution, contending he
is immune from any criminal proceeding when in office. They have
downplayed prior Supreme Court rulings regarding limits on the reach
of presidential authority and point instead to Justice Department
guidance that asserts that a sitting president cannot be indicted or
prosecuted. In a lower court hearing, Trump's lawyers went so far as
to argue that law enforcement officials would not have the power to
investigate Trump even if he shot someone on New York's Fifth
Avenue.
Vance has countered that his investigation is at an early stage and
that there is a risk that documents would be lost if prosecutors
cannot access them now.
(Reporting by Lawrence Hurley and Matt Scuffman; Editing by Will
Dunham)
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