How bad is the New York Trump lawsuit for the former president?

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How bad is the New York Trump lawsuit for the former president? A law professor explains what’s happening.

New York Attorney General Letitia James filed a civil suit Wednesday accusing former president Donald Trump, several Trump businesses and three of Trump’s children of sweeping financial fraud.

James’ lawsuit is the culmination of a three-year probe into Trump’s businesses and the latest jump forward in the tangle of investigations by authorities into the former president. James’ case, which included criminal referrals to the U.S. Attorney’s Office for the Southern District of New York and to the Internal Revenue Service, could have wide-reaching effects, pressuring federal authorities to pursue criminal charges against the former president, said Jed Shugerman, law professor and constitutional history scholar at Fordham University.

“A criminal referral from a state official on these questions helps reduce the concern that this is just the Biden administration targeting a past official,” Shugerman said. “I’m not naive enough to think that a New York attorney general filing that referral is enough to placate Trump’s MAGA base — but for a certain set of legal elites, it says, ‘OK, we’re getting to that point.’ These are institutional steps that reduce concerns about legitimacy.”

Since Trump was elected, Shugerman has closely tracked investigations into the former president and co-authored an amicus brief on one of the early lawsuits against Trump, Citizens for Responsibility and Ethics in Washington v. Trump. He spoke to Grid about what the new complaint might mean, both legally and politically.

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The following transcript has been edited for length and clarity.

Grid: Help me put today’s complaint into context. How big of a deal is this? Will it change the course of the investigations into Trump?

Jed Shugerman: The biggest deal here is [if] they’re building a case not just of civil fraud, but criminal fraud. The added pressure and added institutional evidence of crimes is a bigger deal than the civil issues [listed in James’ complaint].

It’s less clear how [the civil lawsuit] will impact the rest of Trumpworld in the 21st century. Do they have to sell off all of their assets — like [Trump International Hotel and Tower] in New York City?

G: What about the referrals that James made to the IRS and the Department of Justice?

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JS: James didn’t need to make a formal criminal referral for people to pay attention to what happened [Wednesday], but it is a public statement. The New York attorney general has decided formally and institutionally that it looks like there was criminal activity here.

It’s a move to identify crimes and also to put the AG’s office formally behind the idea that there should be a federal investigation of these allegations. And it creates institutional and political pressure on the Southern District of New York and the IRS to take further action. It legitimates that further action.

There’s always concerns about an administration investigating the future presidential nominee. Those are legitimate concerns about [Attorney General Merrick Garland] and the IRS to be cautious about moving forward. But a criminal referral from a state official on these questions helps reduce the concern that this is just the Biden administration targeting a past official. I’m not naive enough to think that a New York attorney general filing that referral is enough to placate the MAGA base. But for a certain set of legal elites, it says, “OK, we’re getting to that point.” These are institutional steps that reduce concerns about legitimacy.

G: How does this look from the IRS’s perspective? Or Attorney General Garland’s?

JS: I said for a while when the new administration came in that Garland was wise to wait for New York state officials and others to pursue these questions civilly and criminally at first. And that’s what’s unfolded. So the delay was prudent — but now that state officials have moved forward, there are some types of crimes that are better brought forward for federal officials.

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There’s also this point about the accumulation of a lot of different cases. There’s an institutional reluctance to bring a first case. But at a certain point, the [Justice Department] has to look at some of these sets of crimes and say, “We’ve crossed a threshold.”

G: Is this a strong case?

JS: Ever since [former Trump lawyer] Michael Cohen testified in Congress about inflating assets for insurance purposes and deflating assets for tax purposes, there’s been questions about whether that constituted fraud or whether it was a standard grey area. It was a question of taking a common practice of fraud that so many businesses engage in and targeting a political opponent. I don’t know if this resolves that question.

And the number of, as they say, over 200 instances of tax fraud. How many are attributable to Trump himself? How many are attributable to [the former chief financial officer of the Trump Organization] Allen Weisselberg? I think one has to be cautious about the number 200, or “over 200 instances” being thrown around, because there are so many defendants in this suit. How many are pertinent to Trump himself? This is why we have a civil process. A New York attorney general gets up and makes a case and has to show evidence, and everyone deserves their day in court.

G: Attorney General James and the Manhattan District Attorney Alvin Bragg have both been investigating the Trump organization. What are possible reasons we’re seeing these civil charges from James but not criminal charges from Bragg at this time?


JS: There is a different burden of proof for criminal and civil cases. James has 200 instances that she sees as easily provable by the “preponderance of the evidence” — that’s a much lower burden of proof than “beyond a reasonable doubt” that’s required by criminal cases.

But if you’ve observed 200 instances of fraud, the Manhattan district attorney now has to answer why he doesn’t see evidence beyond a reasonable doubt.

G: Considering the other investigations into Trump over events like Jan. 6, the idea that his companies committed tax fraud isn’t exactly sensational. Could it wind up being an important tool for prosecutors?

JS: There’s this example of Al Capone. He was not prosecuted for murder — Al Capone was convicted of federal tax fraud. That was easier to prove on paper.

It’s possible that’s what’s happening now. It may just be like Al Capone: that a tax fraud case is the easiest thing to prove on paper without a reasonable doubt. It’s what prosecutors call a paper case. If the evidence is so clear of fraud, it may be a less significant crime than incitement or handling classified documents — but the kind of case where prosecutors said, “This is so clear we will let it break the dam of reluctance to bring cases.”

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G: Would you expect Trump to be indicted for tax fraud in the coming months?

JS: I don’t think that the needle has moved so significantly that we should expect criminal indictments. There’s a very big difference between a civil action and what one needs for a criminal indictment. Trump is also very good at knowing how to communicate with people so that they follow through, but he has plausible deniability, and no emails lead back to him.

Also, there has been a history of allegations or concerns about Trump and tax fraud. This didn’t just pop up.

Today’s lesson isn’t that officials are moving against Trump. It’s that they’ve only gotten this far in 10 years. That’s a crisis in the justice system. What’s going on with the Manhattan district attorney and the New York attorney general, where this is the most we’ve moved in 10 years in New York state?

Thanks to Alicia Benjamin for copy editing this article.

  • Maggie Severns
    Maggie Severns

    Domestic Policy Reporter

    Maggie Severns is a policy reporter for Grid covering complex policy stories and major headlines.