Line Between Lawyering and Complicity in Trump Taxes

to turn over. So a judge ordered these attorneys that Morgan Lewis, who have been representing and advising President Trump and his companies on various tax matters, to turn over a couple of thousand dot com pages of documents at least regarding some of that advice in some of the

specific tax transactions that Trump was involved in. And it's they're being turned over to the New York Attorney General that Tisha James as part of a probe um into some accusations of tax cheating by Trump and the Trump organization. Did the law firm try to fight the request, try to claim attorney client privilege? And how did that go? Apparently not so well they did, and it didn't go

well for them. The firm made two arguments that it was these documents were covered and protected by attorney client privilege between the firm and the company, and also that they were attorney work product, which doesn't have to be turned over under the rules for this kind of thing. The judge rejected that argument and said that UM a lot of these documents had to do with UM sort of talking about statements to the media UM communications of

a non legal advice matter. Whether that's because the actual subject of the communication was not a legal question, or because non lawyers and folks who were not UM clients were also involved in some of those communications. We have not seen the actual documents ourselves, those have been under UH feel by the court UM. But what we do know is that they the investigators are looking in particular at two acts deals that these lawyers advised Trump on.

One of them has to do with the property in Westchester, New York, UH and the other one is out in l a UM. And what they're looking at here is that there were certain property and easement on certain property owned by Trump was donated UH for charitable causes as a conservation easement. And what they're looking at there is how much of a tax UH break the company took in return for donating those easements, and the tax break

is based on how those the properties were valued. And there are some allegations there that the Trump organization has been inflating the value not only of these two easements, but of a wide range of property for several years now in order to get tax breaks UM and favorable loans.

How much is done by accountants and how much by lawyers, you know, there's a lot of money involved here and a lot of different things in play, so I think can vary based on the situation, but it was safe to assume that an organization the size of the Trump organization would not only have tax lawyers working on these things, but professional accountants as well, and so it would be

done under the advice of both the lawyers and the accountants. UM. My understanding and what I was told from some of the experts here is that the accountant would certainly be the first line there and the person who's who's calculating what the value of this property is UM, But the tax lawyers would ultimately be reviewing that and making calls in terms of how whether that's um you know, they're pushing the envelope too much in terms of the value

or running into potential legal questions. Otherwise, the lawyers who have represented him. The tax lawyers have represented him for

a while. Right, that's right. The firm is Morgan Lewis, and it's a pair of attorneys, most notably a woman named Sherry Dillon, who some oakes may remember appeared at with then President elect Trump in two UM at a closely watched UM press conference at his hotel in Manhattan in which President Trump pledged and rolled out a plan under which he was going to divest from all of

his various businesses before entering the White House. And he also showed up with a stack of boxes which he claimed where his tax returns um which he also said he was willing to turn over just as soon as this ongoing UM audit was finished. And so Dylan was standing by his side there and and even was wampooned on on Saturday Night Live the next week when they

did their own skit on that press conference. UM. So she's been well known as a Trump tax advisor for several years, even dating back to before when she joined Morgan Lewis six or seven years ago. And then the other person at issue here is a guy named William Nelson, who's a tax law veteran, had worked UM during the Reagan administration and has been with the firm for several decades.

Both of these attorneys, in addition to a few others from Morgan Lewis, has really been the primary advisors for the Trump Organization and President Trump on a lot of his tax matters. Can lawyers advising clients about tax matters be themselves found responsible for a client's illegal acts or

illegal claims made? Potentially? And I think it's worth pointing out here that there has been no public accusation that either of these two attorneys, or that the firm otherwise has violated ethics laws, ethics rules, criminal laws, or itself is facing any civil liability. But it is interesting to see that investigators are taking a closer look at these transactions, and it specifically are looking at these lawyers roles in

those transactions. So my understanding is that there is certainly some gray area and some wiggle room here, and that attorney UM should be allowed to, if they're clients, full throated advice. And if you know, it turns out down the road that the I R S or the SEC or a judge maybe UM disagrees with the legal conclusions that the attorney reached. That's not necessarily going to get the attorney in hot water unless the advice was just

so reckless or off base. But where attorneys can run into trouble are in these situations where either they are putting their stamp of approval knowingly on some sort of unlawful behavior, or if they're just burying their heads in

the sands and pretending like it's not going on. And so we've seen that in some high profile cases over the course of the last decade or so, where attorneys may face even criminal penalties, and in one situation where a tax firm because of the civil penalties that they faced, wrapped up in one of those cases that wound up going out of business. So a lot of times a lawyer will give advice and it pushes the envelope and the client says, let's go for it. Is that kind

of advice testing the limits of the law. Is that kind of advice criminal? I'm hesitant to say that it's criminal, but it's certainly moving into that gray area where there could be some problems. I mean, one person's view of what's pushing the envelope and another of what criminal certainly

could be different. And some of the tax law experts and legal ethics experts say that firms are more and more aware of these gray areas and more and more UM unwilling to test them, particularly the larger firms that have a lot to risk. We're not talking about taking advantage of tax loopholes, correct, UM. Certainly there's nothing wrong with UM any person or business taking advantage of all of the tax benefits and breaks that are available to

them under the law. In this particular case, what we know about the allegations is that investigators both the state and the city level at the Manhattan d A's office are looking into whether the Trump organization violated UH several laws by really inflating and overvaluing these properties. In order to does a lawyer have to report a client if he or she suspects the client is doing something illegal

like inflating assets. There is a that's a very very gray area and very largely based on the situation and the state that you're in, because you're talking about largely state legal ethics rules UM, which vary from state to state.

But that being said, in recent cases, what you're seeing UM is not the firm or the lawyer necessarily reporting the client anywhere, but they do have an obligation to step down UM and top advising or representing the clients in particular, and attorneys looking at potential um personal liability or ethics charges if they knowingly sign their name to something that's filed with the I R. S ors filed in court that they know is false or is misleading

or otherwise violating the law. So who are they bringing the charges against them? It doesn't sound like it's criminal charges. Unclear, I'll say for now, the both Letitia James, the A. G. Her Office, and the Manhattan DA Civans have been um, you know, sort of holding their cards close to the vest in terms of the details of what they're looking into and what potential liability either the President or his

companies may face as a result of that. It seems certainly like um everything is is potentially on the table um. And it also seems certainly like the president, the former president and his companies are the primary target of these probes. The lawyers are simply being swept in as those probes playout. Because it seems like you have two different factors. You keep describing gray areas, and there certainly are a lot of gray areas in this where it's even hard to

draw a line. And then on the other side, you have these tax rules that are so complex that a client by themselves wouldn't be able to in most instances come up with these things. They need an expert exactly. And you could certainly see why an individual or the the person at the company who's signing their name on these these tax documents would turn around and say, well, I just listened to the advice of my accountants and my lawyers. Um. And certainly that would be a hurdle.

Although that's not a defense, could certainly be a hurdle in terms of where these investigations go um probing into the Trump organization and the former president. I'm certain that the investigators are trying to dig in there and get a better sense of who was making the calls on these things, who knew what was going on, and there was the envelope was being pushed or lines were crossed,

Who was making that call? And because I take it because you mentioned a few cases in your story that there aren't that many cases that have been brought against

lawyers in tax matters, that's right. I mean the ones that you see are the ones where, UM, folks are really caught red handed there, you know, whether it's in communications or or they admit to it in cord or to investigators where UH lawyers are knowingly violating the law to assist that their clients, and those are the sort of open and closed cases, UM, and that are easier

to prosecute. I would assume, and you could see why investigators, because there's so much gray area here, UH may not to vote resources to those cases where it's unclear, UM, you what's legal advice and what's criminal activity. Has any lawyer gone to prison over this? Yes? UM, there was a lawyer I believe he was at Sidley Austin, and he was sentenced to six and a half years in prison for writing letters that authorized tax shelters that k PMG had created for various wealthy customers. So he did

six years in jail. UH, and the firm Sidley was forced to say more than thirty nine million dollars in a civil penalty to the I R. Tell us about the timing here. This is all happening at the same time that Morgan Lewis is trying to separate itself from Trump and the Trump organization as a client. A week or two before the judge made this ruling, the firm said publicly that it would be no longer representing Trump for his companies. Can they just drop a client in

the middle of an investigation? It's not that easy, for sure. And I should say that these Morgan Lewis attorneys are among a small army of lawyers from various firms that are representing Trump contax in a wide range of other matters, so he has no shortage of attorneys at his disposal. But there are legal and ethical responsibilities in terms of a firm extricating itself from a client in the middle of an investigation or a court case. So, UM, it's

not something where they can say, Okay, we're done here. Uh, and that's the end of it. There's you know, um ethical rules that have to be met, and um, they have to make sure that Trump has other council available and and that they're checking all the boxes from the ethics side. Thanks Chris. That's Christopher op for a Bloomberg

Law team leader for the Business of Law. I've been talking to former federal prosecutor Robert Mints, a partner of Carter in English about the unprecedented second impeachment trial of former President Donald Trump, seems as if we know the come already, what's the point. Well, that is a great question, and that highlights the fact that that an impeachment in the House followed by a trial in the Senate looks a lot like a criminal trial, but in many respects

it's nothing like it at all. In fact, an impeachment process is really a purely political process. For example, if this were to be a criminal trial and jurors were to have already announced that they were inclined to either convict or a quit a defendant, they would not even be permitted to sit on that jury. But in this case, the jurors are members of the United States said it, many of whom have already announced that they were leaning

either towards conviction or acquittal. Some have maintained that they're going to keep an open mind, but in this case, it seems that the outcome is preordained. There was emotion presented by Senator brand Paul already before this process has already be gone, in which senators voted on the question of whether or not this impeachment trial was even constitutional

to begin with. The argument was that to cause President Trump is no longer sitting president, that this impeachment is unconstitutional, And there were enough Republican senators forty five of them in fact, who already voted in favor of that motion, that suggests that they are disinclined to vote for conviction based upon this argument that the entire process is unconstitutional

at this point. So it does seem that unless there is a huge shift in opinion on the part of the Republican senator's very unlikely we're going to see a conviction at the end of this process. So the first day is going to be devoted to arguments about the constitutionality of having an impeachment trial when a president is out of office, and we can expect the vote to be similar to that taken after Rand Paul's argument. So

on Wednesday, the actual trial will start. Reportedly, the house managers have learned from last time, and they're going to have a much more concise and shorter presentation, heavy on video. What are you expecting to see? Reportedly, the house managers have learned from the last time, and they're going to have a much shorter presentation, heavy on video. What do

we know about what they might do here. I think we're going to see the House managers having learned quite a bit from the first impeachment trial, which went on for almost three weeks, and many people, including members of the Senate who stat through that trial found much of the presentation repetitive and uninteresting. In this case, I think we're going to see something entirely different. This is going

to be a video heavy presentation. It's going to be very visual, and there's going to be a reliance on primary source material as opposed to witness testimony. So what I mean by that is instead of having videos of individual who testified before House committees, we're going to see the presentations by House managers here largely replaying actual clips of President Trumps giving speeches, of President Trump tweeting out comments, and that is going to be the focus of their case.

They are going to try to build this case around President Trump's own words and own tweets. It seems like the problem is going to be connecting his words to his supporters actually storming the capital. I think we we're going to see here is a presentation that takes the Senate chronologically through the month long build up to the

January six storming of the Capital. They're going to try to replay all the speeches, all of the comments, all of the tweets that were made by President Trump challenging the legitimacy of the election, challenging the outcome of the voting process, and then they are going to build to the presentation of Presidents Frump speaking outside the White House only hours before the mob overtook the police and invaded

the Capitol building. They're going to key, in particular on the President's comments his supporters to fight like hell and march to the capital and confront Congress when Congress was at that point certifying the election. The challenge for House managers here is whether or not they can convince any number of Republican Senators that it was foreseeable based upon

the president's comments that this insurrection should happen. It all changes on the question of what was the President's intent and was it foreseeable that this violence would erupt based upon his language. That is going to be the challenge here, and at the end of the day, it's going to be difficult to convince the number of Republican senators seventeens in order to gain a convintion. But let's remember also that this impeachment process and this Peachman trial is largely

aimed at public opinion. House managers know that it's unlikely they're going to get a conviction here, and so what they're really trying to do is create a record for the public to consume as they watch the events leading up to January six unfold again during this trial, all

indications are that they're not going to call witnesses. Does it leave something out of the presentation if you don't have witnesses talking about what President Trump's reaction to the riot was and his failure to take quick action to stop the riot. Well, it's interesting because some of the key witnesses in this trial are actually the members of the Senate themselves, who leaves through the events of January six. So that's another way in which this is a very

unusual trial. Typically, if this were to be a criminal trial, for example, you would never have somebody sitting as a juror who is actually also a witness. But here we have all of the members of the Senate who sat through the events of January six and witnessed the events unfolding in real time before their very eyes. But what's missing here is direct evidence of President Trump's reaction to

these events. We know that he was slow to ask the rioters, the people who had overtaken the police and taken control of the Capitol building to leave, but other than that, there isn't a lot of evidence that shows president state of mind while these rioters had stormed the Capitol Building. There is some indication that the president's lawyers may use video from Democrats talking to crowds, trying to, I guess, replicate the idea of riling up a crowd,

But does that have any bearing here. There is a possibility that in the president's offense, you're going to see his lawyers find examples of Democrats giving speeches that they will argue, we're equally incendiary. In other words, they're going to argue that Democrats in other contexts gave speeches to their supporters that were just as fiery, that were just as incendiary, and in those cases nobody said anything, and they were not responsible for any violence that may have ensued.

In this case, there was violence of a different sort. There was the storming of the capital. But the point that the president's lawyers will be trying to make here is that the president was not responsible for that conduct because it was, in some substance not all that different from the same type of language that Democrats used in

trying to speak to their base of supporters. Another constitutional argument the defense is going to use is that Trump had the First Amendment right to make the speech that he did. Is that a strong or weak argument in your opinion? Well, it's really not a case about First Amendment right. It's a case about whether it was foreseeable that this insurrection would have resulted as a result of

the words that were spoken. One of the interesting issues that we may see unfold in terms of the president's defense team is how they handle the president's claims about election fraud and that the results of the election were stolen from him. That's a highly controversial area that Republicans in the Senate do not want to see as the

centerpiece of that defense. So far, the defense lawyers have handled that in a very delicate way by arguing that there was quote unquote insufficient evidence it true that the president's claims about election fraud were fall So in some ways they're trying to thread the needle there by not taking on that issue directly, which is something that Senate Republicans do not want to see as a centerpiece of the President's defense, but at the same time not leaving

it out altogether, which is something that former President Trump legedly feel strongly about. In the brief that the defense filed today, their final brief before trial, they really made a political argument against the Democrats as well. They said that this was an act of political theater and that the Democrats were exploiting the chaos and trauma of the

Capitol riot just continuing their attacks on Trump. Is that a good argument to make in a case like this to blame the prosecution basically, But what they're trying to argue is that the Democrats are trying to take political advantage of this very unfortunate event that costs the line of five Americans when individual store in the Capitol building. And in a sense they are correct and that this

is a political process. But I think that argument is going to get overwhelmed by the visual evidence of the events of the day, showing these people storming the building, pushing past Capitol police officers. That is going to be something that is gonna be very difficult to rebut and trying to suggest that this is all about politics, I think is probably not going to be a particularly persuasive argument for those people who are going to watch this

trial unfold on television. Do you think that it's an uphill battle to prove Trump's intent? If this were a criminal trial, would they be able to prove his intent beyond a reasonable doubt? Well, that is a great question, But remember it's not a criminal trial here until the standards that ultimately senators will use to either convict or a quit here, or whatever they feel in their heart, in their soul as they look at this evidence is

the right thing to do. There is no legal standard by which senators will judge either the guilt or innocent of the president in this case. It seems that both sides want this to be a really quick trial, about a week long. Is that too short to get all this in and in a week? A week would be an unprecedented impeachment trial. Remember that President Trump's first impeachment trial lasted three weeks. And this is of course the first time that any president in US history has been

impeached twice. So this is going to be a very abbreviated trial. It's going to be mostly visual and video testimony, and in the end, both sides want to see this over as quickly as possible for their own reasons. Democrats

don't want to be seen as overdoing this case. They were in some ways criticized during the first minute impeachment trial for giving a case that went on longer than it should have, it lost the public's interest in some ways, and was very repetitive, and other proportions of their presentation here. They want something that's going to be riveting, that's going to be very cinematic, almost Hollywood like, something that they

will hope that the public will watch closely for one week. Republicans, on the other hand, also want to have this over as soon as possible because they would like to get this behind them and move on. Some Republicans want to move on to what they hope will be a post Trump Republican party. Others are continuing to build their future around Trump Party. So we'll just have to see how

that plays out for Republicans. Thanks Bob. That's Robert Mints of McCarter and English, and that's it for the edition of the Bloomberg Lawn Podcast. I'm June Grosso. Thanks so much for listening, and remember you can always get the latest legal news on our Bloomberg Lawn podcast. You can find them on Apple Podcasts, Spotify, and wherever you get your favorite podcasts. You're listening to Bloomburn