The Daily - The Fate of Trump's Financial Records

Episode Date: July 10, 2020

The Supreme Court ruled yesterday that President Trump cannot block the release of his financial records. Today, we hear the story behind the cases the justices heard — and the meaning of their decisions.Guests: David Enrich, the business investigations editor for The New York Times and Adam Liptak, who covers the Supreme Court for The Times. For more information on today’s episode, visit nytimes.com/thedaily Background reading: The Court cleared the way for prosecutors in New York to seek President Trump’s financial records — but stopped Congress from accessing the records by subpoena for now.Our chief White House correspondent writes that the Supreme Court affirmed the power of judicial independence by dismissing President Trump’s claims of immunity.

From The New York Times, I'm Michael Barbaro. This is The Daily. Today, the Supreme Court issues major rulings on whether President Trump must disclose his financial records, David Enrich on the story behind the cases, and Adam Liptak on the meaning of the decisions. It's Friday, July 10th. David, tell us the story behind these three cases, all related to the president's financial records that reached

the Supreme Court? So this story starts back in 2015 with a decision by presidential candidate Donald Trump not to do something. For decades, there's a tradition among major presidential candidates to release their tax returns so that the public can understand better the finances of the people they might elect. So Carter did this. Reagan, Bush, Clinton, Bush number two did it. Obama did it. And hopefully I'm not forgetting anyone there. But Trump refused to do so, saying that he was under IRS audit. Every year they audit me, audit me, audit me. And it just wasn't going to be possible. I will absolutely give my return, but I'm being audited now, so I can't do it until the audit

is finished, obviously. And I think people would understand that. This immediately raises a slew of questions in the public and in the media about what's going on in Trump's finances. He is someone who, among major presidential candidates in recent decades, is probably unique in terms of the number and gravity of the entanglements he has. He's been running for decades this multifaceted business that has operations and assets all over the world. And so his refusal to release even basic financial information about himself, it raises a lot of suspicion about whether this presidential candidate has something in his finances that

he is trying to hide. Do you believe voters have a right to see your tax returns before they make a final decision? I don't think they do, but I do say this. When the audit ends, I'm going to present them. That should be before the election. I hope it's before the election. And then, of course, he gets elected without ever having released his tax returns. Right. And remind us, what begins to change all this? Well, two things happen. The first is that in the fall of 2018, the New York Times drops this massive investigation into the Trump family's finances. And one of the things it reveals is that Donald Trump and others

committed what looks like fraud in an effort to reduce the amount that they owe in taxes. So that really intensifies the clamor to get a better understanding of what's going on inside the Trump finances. The second thing that happens is that in November of 2018, Democrats regained control of the House of Representatives.

And that means that two of the most powerful congressional committees are now going to be controlled by Democrats instead of Republicans. And in particular, they're going to be controlled by two of Trump's loudest critics on Capitol Hill. When he says we had no contact with the Russians, that's a lie. When his son says I had no contacts with WikiLeaks, that's a lie. And unfortunately, the list goes on and on. Adam Schiff will be the chairman of the House Intelligence Committee. He refuses to turn over the tax returns. What does he have to hide?

And Maxine Waters will be chairman of the House Financial Services Committee. Has he been compromised in any way? Is there money laundering going on? And they make very clear very early on that one of their priorities in this new Congress is going to be to launch major investigations of Donald Trump and his financial dealings. There is enough that we know about him to have legitimate suspicion, and we need to have documentation. And it becomes very clear very quickly that one of the weapons that the congressional Democrats investigators plan to use is to subpoena as much information as they can,

not from Trump himself, but from the financial institutions that he has done business with over the years. And why are they interested in those financial institutions? Well, it's much easier for them to pry information out of a third party than it is to pry it out of Trump himself. Among other things, Trump has shown over the years to not put a whole lot of stock in adhering to things like subpoenas or court orders. He delays, he kicks the can down the road as much as he can. Right. So there are two financial institutions in particular. One is Mazars, which is an accounting firm that has prepared the Trump's taxes over the years. And the other is Deutsche Bank, which is the lender that has provided billions of dollars in loans and other services to Trump and his family over the past two decades.

And David, what was the legal rationale for these congressional committees to subpoena these documents? Because I imagine the subpoenas had to relate to the work of these committees. It depends whom you ask. This needs to be looked into because if there's a financial leverage that the Russians hold over Donald Trump. In the case of the Intelligence Committee. That could warp our policy in ways that are not in our national interest. It was conducting an investigation into foreign interference in the 2016 presidential election. Right. And so their argument was that if there is evidence inside Deutsche Bank's vaults. If the president is claiming no business dealings with Russia while he's trying to make this Trump Tower deal take place, has he also been concealing money laundering with Russians?

Of Trump being in business with Russians or owing money to Russians or being involved in money laundering with Russians. Of Trump being in business with Russians or owing money to Russians or being involved in money laundering with Russians. That's some serious business that we need to look into. We need to follow the money. That was very relevant to the committee's investigation of the Russian interference in the 2016 election. With the House Financial Services Committee, the legal rationale was a little bit murkier. And of course, he has a reputation for everything from filing bankruptcies to cheating people. The argument that they made was that this was part of a broader investigation by the committee into the soundness and propriety of the financial system overall and the banking system overall. and propriety of the financial system overall and the banking system overall.

To basically being involved with the Russians and other foreign entities. And so there's a lot there. And so their argument was that it was highly relevant to figure out if a major financial institution was engaged in wrongdoing as it related to the bank accounts of one of the most powerful people in the world. And the reality is that these also had a real tinge of politics. Maxine Waters and Adam Schiff are two of the most outspoken critics of Donald Trump and his administration on Capitol Hill. And I think it is quite hard to escape the reality that they were looking for dirt on the president. And one of the dirtiest things to look at in their mind was his finances,

because Trump had kept them such a tightly held secret. And if there wasn't anything bad to see, Trump presumably would have released his tax returns and been much more transparent about this from the get-go. And so what is the president's response to these congressional subpoenas? The president's response... The president and his three oldest children

are now suing two of the banks that helped build their family empire. Is to sue. The president's attorneys are trying to circumvent anything the banks would provide to Congress, saying, quote, the subpoenas were issued to harass President Donald J. Trump, to rummage through every aspect of his personal finances.

So he goes to federal court with his family and files lawsuits against Deutsche Bank, against Mazars, seeking to block them from complying with these congressional subpoenas. So block them from handing over his records to Congress. And the argument that the Trump family makes is kind of twofold. One is that there's no legislative or legal purpose to these subpoenas. This amounts to a political fishing expedition on Capitol Hill and doesn't actually have any proper rationale. And the second argument essentially boils down to a separation of powers claim, which is that the president is not exposed or should not be exposed to endless congressional meddling in his personal affairs. So after the family files these lawsuits, federal courts basically hit pause on anyone actually enforcing

these subpoenas. And so the cases go into the federal court system and gradually over the next year work their way up to the Supreme Court. Okay, so that accounts for two of the three cases before the Supreme Court. Trump versus Mazars, his accounting firm, Trump versus Deutsche Bank, Supreme Court. Trump versus Mazars, his accounting firm, Trump versus Deutsche Bank, his bank. And I think that leaves us with one more case, right? That's right. And that case involves the Manhattan District Attorney, Cy Vance. Good morning. Can you hear me? So at the same time that these congressional subpoenas are being litigated in federal court, Cy Vance's office opens up a criminal investigation into Trump and his company.

And this investigation is focused on Stormy Daniels. Who am I? I am. Remember her? I am Stormy. She is the porn star with whom Trump was allegedly having an affair. And what Stormy Daniels and Michael Cohen, Trump's former personal lawyer, say is that they basically paid Stormy Daniels to keep quiet. They provided hush money payments to her in the prelude to the 2016 election. Right. And the issue that Cy Vance and others have been looking into here is whether those payments constituted essentially campaign spending and whether that was an undisclosed and therefore violation of federal campaign finance laws. So Cy Vance starts investigating not only this issue, but also just a whole series of other

potential financial improprieties inside of the Trump organization and inside Trump's personal finances as well. And so as part of that, Cy Vance's office issues a subpoena to Mazars, the accounting firm, the same one that's been subpoenaed by congressional Democrats, and seeks eight years of President Trump's tax returns. And the hope from Cy Vance's office, I think, is that that will shed some light on the inner workings of not just Trump's bank accounts, but also his company, and it could reveal some of the potentially damaging information. So unlike the congressional subpoenas, which have a kind of legislative rationale, this subpoena from the District Attorney of Manhattan, it has a criminal investigatory rationale. Yeah, that's right. This is a criminal investigation, and this is a criminal subpoena that goes to Mazars. And very soon after the subpoena is issued, Trump files a lawsuit against the district attorney's office, arguing

that Cy Vance simply does not have the legal authority to conduct a criminal investigation of the president. Trump's argument is that the sitting president is immune from this kind of criminal investigation. So this case, along with the two involving the congressional subpoenas, they start working their way through the federal court system and eventually land before the Supreme Court, which is where we are now. And the stakes here with these cases are really, really high. And really, it boils down to, does the public have the right to know about the finances of its elected leaders?

Right. And the Trump family's argument is that the answer to that is no. The public doesn't have the right to know. These congressional committees don't have the right to know. And not even district attorneys or prosecutors have the right to know,

not even in a criminal investigation such as this one. And on the flip side, the Democrats and the prosecutors and quite a few others argue that the right to know about your elected leader's financial interests is absolutely core to your ability to determine whether your president's interests are properly aligned with the public's interests. And the only way to really know that is to have a clear understanding of what the president's financial interests are. Right, and those are the theoretically lofty questions at hand here.

But to flip it around, isn't another version of these three cases whether or not a president is entitled to some kind of legal privacy, especially when people seeking his personal financial records have a documented political agenda. Yeah, and there's no question that there are politics at play here. So I think that's a fair point to make, and it's certainly the point that the Trump family is making. I think in practical terms, though, putting aside all of the issues about separation of

powers and presidential powers, practically there is a very important issue at play here, which is there is a lot of very detailed, these highly secretive companies' operations and the president's kind of innermost financial secrets. And of course, this brings us to Thursday and to the Supreme Court finally making a decision in these three cases. Yeah, and this is a really big day. I mean, I've been waiting for this day for as long as I can remember, I feel like. And the stakes, as we said, are really high. There's these huge, important questions of presidential power and the rights of Congress to investigate. And at the same time, this is happening four months before the presidential election.

So this is really the last chance that the media and the public will have to get a glimpse of Donald Trump's innermost financial secrets before election day. So it's really, really hard to overstate the importance of Thursday's decision. David, thank you very much. Thanks for having me. We'll be right back.

So Adam Liptak, our colleague David Enrich, just walked us through the origins of these three cases before the court. So how did the Supreme Court decide? Michael, it was a bit of a split decision. The court adopted a lot of what the president had to say in one set of cases and rejected his main argument in the other case. Okay, I wonder if we can start with the bucket of cases related to Congress, these congressional subpoenas of the president's financial records. What did the court decide in those cases? The court decided that this was a novel issue implicating the separation of powers.

It was hesitant to do anything particularly bold, and it thought that lower courts should take a fresh look at the question of whether the congressional committees had given adequate reasons for seeking vast troves of material and whether they had shown that they truly had a legislative need for them. And specifically, what did the justices have to say about the rationale Congress cited that documents like these relate to their work as Congress? It would inform, you know, an investigation into Russia. It would inform an understanding of the tax system. The court did seem to suggest that the House's argument was so broad that it could be a fishing expedition for all kinds of things, including personal emails, that the House hadn't really offered a limiting principle for why it's entitled to all the stuff it sought. And the truth is,

it sought quite a lot of information. Right. And so to be clear, this means that Congress will not be getting its hands on these records for a long time. Well, it goes back to the lower courts and litigation takes months and months and the election will come and go and a new house of representatives will be sworn in.

So it may be that as a practical matter, this shuts down this particular set of subpoenas. Okay, so that brings us to the second bucket, this case involving a criminal investigation from the Manhattan District Attorney and his subpoena of these financial records in pursuit of that criminal investigation. How did the justices rule in that case? In that case, the justices squarely rejected President Trump's central argument. He had said that he is categorically and absolutely immune from being investigated by state prosecutors while he remains in office. And Chief Justice Roberts, who wrote the majority opinion in both cases, was having none of that. And what was his legal logic for rejecting that claim by the president?

The chief justice said there was lots of precedent. Going back to the treason trial of Aaron Burr, where there was a subpoena for Thomas Jefferson's information. The Nixon tapes case, where Nixon was made to give up tape recordings of Oval Office conversations. The Clinton against Jones case where Bill Clinton was made to provide information in a sexual harassment case. The chief justice said the idea that presidents are above the law in that sense was nonsense. So in the case of the district attorney, he will be getting the records he requested from Trump's accounting firm.

Well, let's not get ahead of ourselves. It certainly clears the way for the Manhattan district attorney to seek the records. The chief justice said, and this is unexceptional, that as with anyone else who's subpoenaed, he can interpose the usual objections. The subpoena doesn't seek relevant material. The subpoena is meant to harass me. The subpoena is too burdensome. And that may take some time to litigate. I don't think the president's chances in New York courts are particularly good. But that part of the decision may, as with the congressional subpoenas, kick this can down the road past the election and maybe much longer. So this victory for the district attorney of New York, this defeat for President Trump, is not likely to result in those records becoming public.

That's right. So there's a school of thought that President Trump was a winner in both decisions. If his goal was to keep stuff secret for a while longer, he was a winner. If his goal was to have the court adopt his sweeping view of presidential power, he was a loser. So Adam, I want to square this decision on Thursday with what David Enrich said were the stakes in this case. And the first question is, is the public entitled to financial transparency from our president? And what did the court ultimately say to that question? The court said, maybe not in so many words, but the thrust of the decisions was, sure, if they're relevant to the president's official sure, the public is entitled to that. But it can't be overbroad. It's got to be targeted and limited and sensible. And the second question is

whether the president is entitled to protection from partisan attempts to dig into his financial records. So what did the ruling ultimately mean for that? The ruling said in the criminal context, the court expected judges to make sure that politically motivated prosecutors weren't doing something unsavory and to protect the president from harassment. And in the legislative context, the court also said that if there's a good enough, strong enough link between a legislative purpose and the need for this information, that too was acceptable, that presidents could be made to turn over information. I mean, what's interesting about your answers to this is that it feels like the principle that has been laid out in these decisions doesn't feel entirely tied to the result of them. You know,

for example, if the court is saying the public is entitled to information about the president and his finances, then why are we living in a world where they won't see them? Well, the court is not about timing. The court is not about tomorrow. It's about principles and processes, and the legal system takes its time. And I know we're all eager to see this information before the election. And of course, it could well inform the ability of citizens in a democracy to choose their leaders correctly. But that's not what the court is focused on. The court is focused on getting it right. And that will take time. And as a practical matter, the amount of time it will take may make it much less politically salient.

But this is not a decision about President Trump. This is a decision about the presidency. And the court has laid down some important markers on that. Adam, reporter to reporter here, do you think we're ever going to see these documents? I mean, ever? I think it's probably more likely they see the light of day through good investigative journalism, including from the New York Times, than through these convoluted mechanisms of congressional subpoenas and grand jury subpoenas. That's not to say it's impossible, but they're more likely to see the light of day in any kind of timely fashion through reporting than through litigation. Thank you, Adam. Thank you, Michael.

On Thursday, the Supreme Court issued a separate ruling finding that much of eastern Oklahoma, including most of Tulsa, falls within an Indian reservation, meaning that state authorities there cannot prosecute offenses involving Native Americans. At issue in the case was whether Congress had officially eliminated a reservation

when Oklahoma became a state in 1907. The justices ruled that it had not. The 5-4 decision is one of the most consequential legal victories for Native Americans in decades. We'll be right back. Here's what else you need to know today. On Thursday, the World Health Organization formally acknowledged that droplets carrying the coronavirus, known as aerosols, can linger in the air within indoor spaces for long periods, raising the risk of infections. The acknowledgement, which scientists said was long overdue, could complicate efforts to socially distance indoors. At the same time, the WHO also acknowledged that seemingly healthy people can transmit the virus even when they don't have symptoms, a finding that the WHO had long resisted.

that the WHO had long resisted. The concept of symptomless spread was raised at least three months ago by a doctor in Germany, Camilla Roth, whose report on a patient there was widely dismissed by scientists, including those at the WHO. The Daily is made by Theo Balcom Andy Mills

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I'm Michael Barbaro. See you on Monday.