Trump’s efforts to keep taxes secret heads to appeals court
A federal appeals court expressed skepticism Wednesday that President Donald Trump can block a subpoena from New York state prosecutors for his tax returns, in a case that all sides see heading to the Supreme Court for an election-year showdown.
Judges from a three-member panel of the 2nd US Circuit Court of Appeals in downtown Manhattan challenged Trump’s private attorney on key elements of his argument, primarily that the President enjoys absolute immunity from all criminal investigations while in office.
Asked by federal Judge Denny Chin about the limits of presidential immunity, and “the Fifth Avenue example,” Trump attorney William Consovoy argued that local authorities in New York City could not prosecute the sitting president even if he shot someone in the street.
The back-and-forth was an allusion to Trump’s comment during the 2016 campaign that he “could stand in the middle of Fifth Avenue and shoot somebody and I wouldn’t lose voters.”
The controversial quote was first invoked by Carey Dunne, who argued on behalf of the Manhattan district attorney, who issued the subpoenas for Trump’s tax returns. Dunne said, “You could imagine it would be necessary, or at least perhaps a good idea,” to indict a sitting president “if he, for example, did pull out a handgun and shoot someone on Fifth Avenue.”
The case revolves around a subpoena to Trump’s accounting firm, Mazars USA, and the appeals panel hasn’t been asked to weigh in on whether Trump can be charged while in office.
After New York District Attorney Cyrus Vance subpoenaed the President’s tax returns this summer, Trump’s lawyers went to federal court to stop him. A judge dismissed that lawsuit earlier this month, but Trump’s lawyers swiftly filed an appeal and want the lawsuit revived.
The case can be traced back to the hush-money payments to adult-film actress Stormy Daniels and another woman who alleged extramarital affairs with Trump, which he denies. State prosecutors want to know if the Trump Organization, based in New York, filed false business records to cover up the payments.
Both sides struck a deal Monday to fast-track any Supreme Court petitions after the appeals panel weighs in, potentially teeing up a dramatic showdown months before the 2020 election.
Chief Judge Robert Katzmann alluded to that during the hearing, saying, “This case seems bound for the Supreme Court. … We have a feeling that you may be seeing each other again in Washington.”
All three judges on the panel were appointed to the federal bench by Democratic presidents. They did not indicate during Wednesday’s hearing when they will hand down their decision.
They pressed Trump’s lawyer for a reason why compliance with a subpoena in a state probe would cause a massive distraction preventing the President from doing his job.
“The premise is that this is a distraction; it distracts the President from carrying out his duties,” Chin said of Trump’s arguments. “Where is the distraction if the subpoena is served on accountants? The President doesn’t have to do anything to comply with the subpoenas.”
Katzmann pointed out that decades-old Justice Department guidelines about presidential immunity “seem to suggest that there are things that can be gathered while the president is still president, even if the president cannot be indicted while in office.”
The judges also noted the landmark case involving former President Richard Nixon, who was forced to comply with a subpoena for White House tapes during the Watergate investigation.
Consovoy, who represented Trump during the hearing, argued that the subpoenas were part of “a fishing expedition” and that if they are permitted to move forward, overzealous prosecutors around the country could take part in the feeding frenzy and subpoena Trump for anything.
“We are objecting to the entirety of the subpoena,” Consovoy told the judges. “We view the entire subpoena as an inappropriate fishing expedition, not made in good faith.”
Even if the Manhattan district attorney obtains Trump’s highly coveted financial records, they’ll likely remain secret unless they’re used as evidence at a trial. Asked if the district attorney’s office pledged to keep the tax returns confidential, Dunne replied, “Yes we do, your honor.”
Last month, Trump’s team asked a lower court to block the subpoenas, and to stop Mazars from sending over the tax records, until Trump leaves office. His lawyers argued that a criminal investigation of the sitting president is “unconstitutional.” In a surprising move, the Justice Department got involved and also requested a temporary freeze on the subpoenas.
US District Judge Victor Marrero dismissed the lawsuit. He invoked the Founding Fathers and excoriated Trump’s claims of immunity as “repugnant” and an “overreach of executive power.” After his ruling, the appeals court stepped in to temporarily block the subpoenas during the appeal.
The legal wrangling is the latest clash in the multi-dimensional fight for Trump’s tax returns, which has been led by Democrats on the federal and state level. Vance is a Democrat.
Vance’s investigation comes after the Justice Department probe into the payments, which landed former Trump attorney Michael Cohen in prison for violating federal campaign finance laws. He is at a federal prison in New York and is slated to be released in December 2021.
Trump has gone to extraordinary lengths to keep his finances private, even though he promised to follow decades of precedent and publicly release his tax returns before the 2016 election.
His critics have alleged that his tax returns could expose massive debts to foreign interests or that is he not as wealthy as he claims to be. A Forbes estimate from September said Trump is worth $3.1 billion, though Cohen has testified that Trump inflated his earnings in the past.
CORRECTION: This story has been updated to correctly identify that Judge Denny Chin asked about the “Fifth Avenue” example.