The Battle for Trump’s Financial Records: What Happens Tomorrow at the Supreme Court?

December 12, 2019 1:15 pm By

Since Democrats took over the House of Representatives almost twelve months ago, Americans have read story after story about Congressional Committees heading to court to fight for documents and evidence relating to potential misconduct by President Donald Trump. Some of the evidence relates to conduct that took place while he was President, but most of it is connected to Trump’s years managing his businesses in New York City and Florida. Now, House requests for two major pieces of evidence are on the doorstep of the most powerful court in the country: the U.S. Supreme Court.

The slow pace of these court cases had many asking what was taking so long to get information about Trump’s mysterious business empire. The reason the cases have been so drawn out is that Trump’s total refusal to provide any evidence to Congress is a historical first. Richard Nixon and Bill Clinton, even as they fought off impeachment, provided Congress with some information requested by Committees in the course of their investigations. It didn’t matter that the information was damaging: for example, Clinton provided a DNA blood sample to House Republicans at their request which was later used to establish that he had a sexual relationship with a White House intern. This in turn established Clinton committed perjury when he lied about the affair under oath. Clinton must have known the DNA sample would incriminate him, but he accepted Congress’s authority to request something as invasive as his own blood when it was investigating potential Presidential wrongdoing. Meanwhile, Donald Trump has not handed over a single document to House Democrats to comply with their investigative efforts—not his tax returns, not his business records, nor has he allowed any White House staffer to testify about Presidential conduct covered by the Mueller Report or the whistleblower complaint.

By completely refusing to comply with oversight by a co-equal branch of government, Trump forced Democrats to go to court for everything. Cases snaked their way through district courtrooms in Washington and New York with a speed consistent with (or even quicker than) the typical case in the U.S. judicial system. Trump lost every single one. That’s right—not a single court has sided with Trump’s argument that House Democrats cannot access evidence regarding his conduct before and during his Presidency. He then launched appeal after appeal, hoping to stymie efforts to obtain hard evidence about his potential wrongdoing. In doing so, he dragged out each case to what felt like no end. But finally, this November, amidst a whirlwind impeachment spectacle and on the precipice of the 2020 election, Trump’s strategy to run the clock on his cases hit a wall. The first case that House Democrats’ brought to obtain Trump-related evidence finally made it to the Supreme Court. Just days later, another case followed suit. If the Supreme Court rules in Congress’s favor in either case, long-sought evidence will be transmitted immediately to House Committees investigating the President.

Here, we are going to break down exactly what evidence is being sought by House Democrats and the status of each case on the doorstep of the Supreme Court. This way, readers can evaluate exactly what evidence is at stake, as well assess the arguments Trump is leaning on to block the evidence from being examined. We’ll let you know, based on our legal expertise, whether we think the Supreme Court will agree to hear the case, and, if so, what we think the outcome will be. While predictions about Supreme Court decisions are never certain, we put our heads together and looked to relevant case law to evaluate what the Supreme Court might do in each situation, and then made the most informed assessment we could.

Trump’s Tax Returns (Trump v. Mazars, USA, LLP)

The first case at the Court involves President Trump’s tax returns. It is now widely known that President Trump used an accounting firm, called Mazars USA, to do business and file taxes. In February 2019, President Trump’s former personal lawyer, Michael Cohen, testified to Congress before leaving to serve a federal prison sentence that Trump inflated and deflated assets on personal financial statements prepared by Mazars. After Democrats heard a third party was in possession of the tax documents (which Trump famously refused to make public, insisting he would do so as soon as they were no longer under a never-ending “audit”), they decided to issue a subpoena from the House Oversight and Reform Committee to obtain them. On April 15, 2019 the subpoena was issued; seven days later, Trump sued both Mazars and the Committee to block transmission of the documents. A district Judge ruled against him and ordered the documents be turned over immediately; however, the D.C. Circuit Court of Appeals delayed transmission until it gave Trump the chance to appeal, which he did. In October, however, the D.C. Circuit also rejected Trump’s arguments and ordered the tax returns be handed over to Congress. On Nov. 25, Trump asked the Supreme Court to issue a temporary stay (a fairly typical request the Supreme Court usually grants) while he petitioned them to take up his appeal of the rulings. They did, and on Dec. 5 Trump filed a formal petition for the Court to take up the case. Trump’s attorneys laid out this explanation for why the Court should hear his claim: 

The Committee on Oversight and Reform of the U.S. House of Representatives has issued a subpoena to the accountant for President Trump and several of his business entities. The subpoena demands private financial records belonging to the President. The D.C. Circuit upheld the subpoena as having a legitimate legislative purpose and being within the statutory authority of the Committee. The question presented is: whether the Committee has the constitutional and statutory authority to issue this subpoena.”

The Court is being asked to decide what constitutional lawyers call a “separation-of-powers” dispute between the branches. Does the legislative branch have the authority to demand the private business records of the President for the purposes of oversight? Remember, these subpoenas were issued before the impeachment inquiry was announced. While the Supreme Court does not have to ignore the fact that Congress’s powers to investigate the President are heightened by the existence of an impeachment investigation, the main question here is whether Congress has the general authority to subpoena the records even when it is not considering impeachment. It is worth noting the Supreme Court prefers to resist wading into disputes between the two other branches of government if it can help it, largely based on a principle called the “political question doctrine.” That principle stresses that the Judicial Branch should avoid deciding inherently political cases which should really be determined by elected officials coming to an agreement or facing voters at the ballot box who might punish them for their political decision to stonewall. Here, it is unlikely the Court can use the political question doctrine to avoid the topic, as it relates to enforcement of a subpoena by lower federal courts which entangles the Judicial Branch in the dispute.

Trump’s lawyers begin their petition by arguing that this case presents such important issues the Court should not avoid taking it on, mainly because Trump is the President and the President should have his day in court on an issue this serious. After that, they argue the Committee’s subpoena is invalid because it lacks a “legitimate legislative purpose,” which is loosely required for Congress to obtain information it has subpoenaed. Trump’s attorneys say that any legitimate purpose that the Oversight Committee had to issue the subpoena is subverted by the fact it is actually improperly acting as a law-enforcement entity investigating President Trump, a function reserved to the Executive Branch agencies like the FBI or DOJ. Next, they argue the Committee investigation behind the subpoena could not possibly result in legislation that would be constitutional because it would try to control the President, violating separation-of-powers principles. This is a clever way to get the Court to consider a separation-of-powers argument in spite of the fact that the subpoena itself is not addressed to the Executive Branch, and Donald Trump is represented here in his personal capacity. Finally, they argue the Committee lacks authority under federal law to issue any subpoena to the President. This argument appears strained at best: the subpoena in this case was issued to Mazars, not the President, and requires nothing of the President except him sitting back and doing just that—nothing. 

The House Oversight Committee has not yet filed its response to Trump’s request for the Supreme Court to hear his appeal but is scheduled to do so any moment. It is likely they will argue the subpoena does serve the legitimate legislative purpose of determining whether federal law should require Presidential candidates to release their tax returns. The House will also likely assert it is not engaging in law-enforcement activity, but that even if it were such activity would be permissible because (as so many of us learned from Robert Mueller’s investigation) Executive Branch law enforcement agencies cannot indict a sitting President and are therefore limited in their ability to hold the President accountable for potential wrongdoing. Finally, the House will argue the subpoena does not affect Trump’s ability to govern or burden him in any way because it does not ask him to produce a single document.

Do we think the Supreme Court will hear the case?

Yes.

What do we think the outcome will be?

We predict the Supreme Court will likely side with Congress and order Mazars to give the tax returns to the House Oversight Committee. Article I of the Constitution, which spells out what powers Congress has, is the longest single section of the entire Constitution. If Congress has no authority to compel an accounting firm to turn over documents that might lead to legitimate legislation, then it truly might not be able to effectively legislate at all about ethics disclosures during campaigns. Furthermore, these documents are not protected by Executive Privilege or Attorney-Client Privilege. Previous Supreme Court cases strongly suggest that Congress should be allowed to access documents relating to Presidents where these privileges don’t exist. Remember, a unanimous Supreme Court ordered President Nixon to give Congress recordings he possessed that implicated himself in wrongdoing despite the fact that Executive Privilege may have applied to all of the tapes. If Nixon was required to turn over this privileged information he, the President, possessed, it seems logical a third party accounting firm should be required to turn over non-privileged information it possesses.

Trump’s Tax Returns II (Trump v. Vance)

The House isn’t the only government entity trying to get its hands on Trump’s tax returns. The District Attorney for Manhattan, Cyrus Vance, asked a grand jury to issue a separate subpoena to Mazars for the President’s tax records as he investigates the Trump Organization and Trump-related entities for criminal activity. That case, which wound its way through the D.C. Circuit, similarly saw Trump ask courts to block the subpoena (and also saw him lose again and again). The case presents a slightly different question:

Whether a grand-jury subpoena served on a custodian of the president’s personal records, demanding production of nearly 10 years’ worth of the president’s financial papers and his tax returns, violates Article II and the Supremacy Clause of the Constitution.”

Vance argues that his office should be entitled to the information contained in the tax returns. The important thing to understand about this case is that Vance has very different legal standing than the House. A grand jury subpoena is the strongest kind of request the government can make for information. It means the government has already jumped through a few hoops and presented evidence to a grand jury, enough evidence to convince a group of citizens sitting on the grand jury that a demand for more information was justified. More than that, the argument Trump’s lawyers make in the other Mazars case that the House should not have access to the records because it improperly engaging in law enforcement activity doesn’t apply here, because the Manhattan D.A. is a law enforcement agency.

The fact that both cases are at the Court simultaneously presents the Justices with a fascinating opportunity. When Robert Mueller insisted he could not accuse Trump of committing a crime due to DOJ’s internal policy that a sitting President cannot be indicted, many news pundits and legal analysts spoke about how this was merely DOJ policy and not established. The Manhattan D.A.’s office is a state agency and not bound to the DOJ’s policy, so it began investigating the Trump Organization and issuing criminal grand jury subpoenas. However, the policy is based on the rationale that a President cannot be indicted as a constitutional matter. If that is correct, a state law enforcement agency would likely be barred undertaking a criminal investigation of a sitting President, making the grand jury subpoena potentially unconstitutional.

Now, here’s where things get really interesting. Under the Trump Administration, the DOJ has also taken a hardline position that the President has “total immunity” and cannot be investigated by Congress, either. So, the DOJ believes that it cannot accuse or indict a sitting President for criminal wrongdoing, and also believes that Congress cannot subpoena a sitting President’s records to investigate criminal wrongdoing. The dual Mazars cases present the Court with the chance determine which position, if either, should be the rule. Should Congress serve as a law enforcement entity when it comes to investigating the President? Or should law enforcement agencies like the DOJ and State District Attorneys pursue criminal investigations of the President? Is it really possible that the President is beyond any and all investigative oversight by any branch of government anywhere? That conclusion seems pretty unlikely, so the question will be which part of government should undertake such investigations, the Legislative Branch or investigative agencies?

Do we think the Supreme Court will hear the case?

Yes.

What do we think the outcome will be?

This case is a tougher call than the other two. The current Supreme Court is composed of a majority of Republican-appointed judges. These judges were selected in part due to their belief in a very strong Executive Branch, and the DOJ no-indictment policy is wrapped around that idea as well. It’s likely the Court, in handing Congress a win on oversight of Trump in permitting its subpoenas of his tax records, would also hand conservatives a win and affirm the notion that a sitting President cannot be indicted, codifying the longtime policy as constitutional law and exempting Presidents from criminal grand jury investigations while in office.

Trump’s Deutsche Bank Records (Trump v. Deutsche Bank, AG)

In April, the House Committee on Financial Services and the House Permanent Select Committee on Intelligence issued two other subpoenas – one to Deutsche Bank, the other to Capital One – seeking records on President Trump, his family, and the Trump Organization. While still publicly unknown, the breadth of information held by these two financial institutions could be potentially explosive. As Bobby reported in August, a lawyer for the House before the Second Circuit Court of Appeals arguing in favor of the subpoenas disclosed that lawmakers are seeking records from the financial institutions as part of a major money laundering investigation. The lawyer, Douglas Letter, stated to the court that the House is investigating “massive amounts of Russian money that is being laundered into the United States.”

The House’s focus doesn’t come out of thin air. Deutsche Bank was recently fined over half a billion dollars for failing to prevent money laundering in the United States and United Kingdom. The New York Times reported that Deutsche Bank also made substantial loans to President Trump when other banks were unwilling to do so. The loans weren’t typical business investments, but rather a mysterious extended line of credit that ran to the tune of $2.5 billion. Trump’s history with Deutsche Bank further complicates the relationship. After failing to pay off loans and countersuing Deutsche Bank for $1 billion (and then losing), Trump went back to Deutsche to ask it for an unimaginable favor: he wanted the Deutsche private banking division to pay off his outstanding loan to the Deutsche real estate division. Even more astonishing is that the bank agreed to do it, a move experienced bankers and financial experts characterized as “unheard of.” The same private banking division that issued this suspicious loan also managed finances for Jared Kushner and Jeffrey Epstein. Allegedly, multiple Deutsche Bank employees flagged Trump, Kushner and Epstein’s transactions for money laundering concerns but were ignored or quieted by senior executives.

Naturally, House Democrats read the newspapers. They quickly issued subpoenas for Deutsche Bank’s records concerning Trump and his family. President Trump, the Trump Organization, and his family members rapidly petitioned a federal court in New York to quash the subpoenas. After losing that petition, President Trump appealed to the Court of Appeals for the Second Circuit. On December 3, the Second Circuit also ruled against President Trump, ordering both financial institutions to turn over the Deutsche Bank records requested by the House. Judge Newman, writing for the Second Circuit, began by noting that the case is not a separation-of-powers dispute – none of the information sought deals with President Trump’s official duties or anything involving his tenure in office. Similarly, the thorny issues of executive privilege are not raised by this case. The Deutsche Bank subpoena deals solely with the issue of whether Congress has the constitutional authority, through a valid legislative purpose, to seek a private citizen’s financial records if he is currently occupying the job of the Presidency.

After acknowledging that the subpoenas are “broad in scope,” the court noted that “inquiry into private affairs is not always beyond the investigative power of Congress.” The court concluded the House has a “valid legislative purpose” for investigating President Trump’s connections to Deutsche Bank and Capital One, highlighting House hearings on these matters, and the fact that it “considered bills to combat financial crimes, such as money laundering.”

One judge, Judge Livingston, dissented in part from the Second Circuit’s ruling, arguing the case should be sent back down to lower courts to develop a record of the House’s purpose for seeking these records. Finding the subpoenas “deeply troubling,” Judge Livingston pointed out that the House is seeking not only records from the President but also from his wife, children, and businesses. She noted that Congress has never issued “a third‐party subpoena for documents targeting a President’s personal information solely on the rationale that this information is ‘in aid of legislation.'” Judge Livingston took issue with the majority’s view that the case does not present separation-of-powers concerns, arguing that the dispute “implicat[es] not only Congress’s lawmaking powers, but also the ability of this and future Presidents to discharge the duties of the Office of the President free of myriad inquiries instigated ‘more casually and less responsibly’ than contemplated in our constitutional framework.”

Following his loss at the Second Circuit, President Trump’s lawyers asked Justice Ruth Bader Ginsburg (who handles emergency stays for the Second Circuit) to put that ruling on hold until he was able to petition the full Supreme Court to take up this case, too. President Trump argues the subpoenas lack a legislative purpose, and are merely “an attempt to exercise executive power beyond Congress’s legislative reach and to expose [his] private records ‘for the sake of disclosure.'” If the stay is not granted, President Trump argues, the records will be released, “irrevocably destroying [Trump’s] legal right to keep them confidential.”

On December 6, Justice Ginsburg granted the administrative stay requested by President Trump. The Supreme Court will now decide whether to hear the case with the Mazars dispute, or to grant a longer stay until both the House and Trump have more time to articulate why the Court should or should not agree to hear the case. The House asked the Court to deny Trump’s request for that kind of stay on December 11. In the event the Court does decide to grant the stay, House Democrats asked the Court to hear the case more quickly than the usual schedule permits:

If the Court does grant a stay in this case, the Committees respectfully request that the Court either treat the stay papers here as a certiorari petition or condition any stay on the expeditious filing of such a petition, to ensure that this Court may consider the petition on an expedited basis.”

What this means is that the House wants the Supreme Court to treat Trump’s emergency stay request as equivalent to his formal request for the Court to hear the full case, eliminating the need for a longer delay to allow both parties to articulate their positions. The logic here is that Trump has already articulated this rationale in his Mazars filings, and that the two cases present such similar questions there really is no need for a longer delay. Alternatively, the House asked the Court to order a shortened schedule for the case if they do decide to hear the case but don’t want to hear it at the same time as the Mazars case.  They connected this request for a speedy hearing schedule to the impeachment proceeding in all but name, saying, “nothing is more urgent than efforts to guard against foreign influence in our systems for electing officials, particularly given the upcoming 2020 elections.” They again stressed the importance of a quick schedule, for both this case and the Mazars case, in the closing paragraphs of the filing:

If the Court grants the stay, the Committees request that the Court expedite consideration of certiorari (a legal term referring to the request that the Supreme Court agree to hear the case) . . . The House Oversight Committee will file today an opposition to the petition for certiorari in Mazars. The Court should condition any stay here on the filing of a certiorari petition at the earliest practicable date, or, alternatively, could treat the stay application itself as a petition for certiorari. Any stay of this case would cause the House serious injury, but ‘expeditious treatment,’ would lessen that injury to some extent.”

Do we think the Supreme Court will hear the case?

Yes.

What do we think the outcome will be?

While the case is similar to the Mazars case in many respects, there are some areas that might give some of the justices pause, particularly the conservatives. Judge Livingston’s dissent could provide a roadmap for a majority of justices to conclude that these subpoenas are too broad, or focused too much on private individuals. Justice Roberts, who has sought out “middle ground” in several Trump-related cases, may look favorably upon a limited ruling sending the case back to the lower courts to develop a further record on Congress’ legislative purpose. However, that would essentially amount to a win for Trump, as that case would not make its way back through the court system for a year or more. In any case, like in Mazars, a blanket ruling shielding President Trump from turning over these records would send the law in this area into uncharted territory.

Ultimately, all the cases are tough hills to climb for President Trump. He has to fight decades of precedent affirming Congress’s authority to subpoena information, multiple precedents of Presidents being ordered to turn over more sensitive information than bank records or tax returns, and is doing battle against both Congress and state agencies, which raises the question of whether the President can be subject to any oversight at all. This is an existential question no President wants the Supreme Court to have in mind while ruling on his claims of blocking information. Throughout history, the Supreme Court has tended to err (often unanimously) that more oversight is better than less. We think that trend will likely continue in the weeks to come.

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