A New York judge ruled Thursday that former President Donald Trump and two of his adult children must comply with subpoenas that require them to answer questions under oath and turn over evidence for a civil investigation of him and the Trump Organization by the state’s Attorney General’s Office.
Trump, Donald Trump Jr. and Ivanka Trump all were ordered by the ruling to appear for depositions by investigators for Attorney General Letitia James within the next 21 days.
The ex-president also was ordered to comply within 14 days with a subpoena’s demand for documents and other information.
“In the final analysis, a State Attorney General commences investigating a business entity, uncovers copious evidence of possible financial fraud, and wants to question, under oath, several of the entities’ principals, including its namesake,” Manhattan Supreme Court Judge Arthur Engoron wrote in his ruling.
“She has the clear right to do so.”
James is investigating whether the Trump Organization improperly stated the valuations of various real estate assets to obtain more favorable loans, insurance rates and tax benefits. Donald Trump Jr. still runs the company with his brother Eric, while Ivanka previously was a top executive at the firm.
Trump also faces a pending criminal probe into the same issues by the Manhattan District Attorney’s Office. James has sent investigators from her office to assist in the DA’s probe.
The ruling, which is likely to be appealed, came after a contentious court hearing, where lawyers for the Trumps attacked James for conducting what they said was a probe tainted by political bias and was a violation of the elder Trump’s constitutional rights.
The Trump lawyers had sought to block the subpoenas on those and other grounds, while James’s lawyer was asking Engoron to force the Trumps to comply with previously issued subpoenas.
The attorney said that Engoron’s ruling in favor of her office was “a major victory” in her ongoing probe of Trump and his company.
“Today, justice prevailed,” James said in a prepared statement, which called her probe “lawful.”
“No one will be permitted to stand in the way of the pursuit of justice, no matter how powerful they are,” James said. “No one is above the law.”
Engoron in his ruling dismissed the argument that James’ investigation was solely motivated by her personal disdain for Trump and thus illegitimate.
“Indeed, this Court’s in camera review of the thousands of documents responsive to [the Office of the Attorney General’s] prior subpoenas demonstrates that OAG has a sufficient basis for continuing its investigation, which undercuts the notion that this ongoing investigation is based on personal animus, not facts and law,” Engoron wrote.
“For OAG not to have investigated the original respondents, and not to have subpoenaed the New Trump Respondents, would have been a blatant dereliction of duty (and would have broken an oft-repeated campaign promise),” Engoron wrote.
“Indeed, the impetus for the investigation was not personal animus, not racial or ethnic or other discrimination, not campaign promises, but was sworn congressional testimony by former Trump associate Michael Cohen that respondents were ‘cooking the books.’ “
Engoron likewise brushed aside the Trumps’ argument that the issuance of civil subpoenas while the criminal probe is also occurring allows James “to extract information from them under the guise of a civil proceeding without OAG’s having to offer them the immunity that a grand jury setting would afford them.”
“This argument completely misses the mark,” Engoron wrote.
“Neither OAG nor the Manhattan District Attorney’s Office has subpoenaed the New Trump Respondents to appear before a grand jury.”
Engoron also noted that the Trumps’ “argument overlooks the salient fact that they have an absolute right to refuse to answer questions that they claim may incriminate them.”
“Indeed, respondent Eric Trump invoked his right against self-incrimination in response to more than 500 questions during his one-day deposition arising out of the instant proceeding.”
A spokesperson for Trump did not immediately respond to CNBC’s request for comment on the ruling.
Alan Futerfas, a lawyer for Donald Jr. and Ivanka, said, “As we advised Judge Engoron there is a likelihood that we will appeal.”
The ruling came on the heels of another blow to Trump and to his company, one that was cited by Engoron in his decision.
On Feb. 9, the accounting firm Mazars told the Trump Organization that its statements of Trump’s financial condition “should no longer be relied upon” for the years ending June 30, 2011, through June 30, 2020.
Mazar, which on that same day told the Trump Organization that it would no longer work for the company, said it came to that decision in part due to James’ investigation.
“While we have not concluded that the various financial statements, as a whole, contain material discrepancies, based upon the totality of the circumstances, we believe our advice to you to no longer rely upon those financial statements is appropriate,” Mazars told the Trump Organization.
Lawyers for Trump had said on the heels of Mazars statement that it meant there was no need to continue the investigation of the company.
Engoron scoffed at that.
“To proclaim that the Mazars red-flag warning that the Trump financial statements are unreliable suddenly renders the OAG’s longstanding investigation moot is as audacious as it is preposterous,” the judge wrote.
Engoron also wrote: “The idea that an accounting firm’s announcement that no one should rely on a decade’s worth of financial statements that it issued based on numbers submitted by an entity somehow exonerates that entity and renders an investigation into its past practices moot is reminiscent of Lewis Carroll (‘When I use a word, Humpty Dumpty said … it means just what I chose it to mean — neither more nor less’); George Orwell (‘War is peace, freedom is slavery, ignorance is strength’); and ‘alternative facts.'”
During the hearing earlier Thursday, which was conducted via remote video hookup, Trump’s lawyer Alina Habba several times was reprimanded by Engoron’s clerk for interrupting the judge.
“Counselor when the judge speaks you need to stop talking,” the clerk told Habba, who during her arguments suggested that Hillary Clinton should be under investigation by James, and not Trump.
Habba argued that the probe of Trump is unconstitutional and should be thrown out — even if James’ office has evidence of wrongdoing.
“It’s per se invalid,” Habba said of the investigation. “It doesn’t matter if they find all sorts of incriminating evidence.”
“The evidence is irrelevant,” Habba said at another point
Habba pointed to repeated negative comments James made about Trump while campaigning for attorney general, which included vowing to investigate him for things such as money laundering.
“Letitia James can’t run away from her own words,” Habba said.
And the lawyer said the probe was sparked by bias by the Democrat James against Trump because he is a Republican, as opposed to legitimate questions about his business practices, which Trump’s own former personal attorney Cohen has testified were corrupt.
“He’s allowed to be a Republican,” Habba said.
Habba also argued that Trump is a member of a “protected class,” citing his exercise of political speech as president.
That legal designation is applied to groups who qualify for special protections against discrimination.
“If he was not who he is, she would not be doing this, your honor,” Habba said. “That’s what my argument is.”
But Engoron shot back, “He’s not a protected class.”
The judge added that even if James has a grudge against Trump, that does not amount to “unlawful discrimination.”
Kevin Wallace, an attorney for James’ office, responded by quoting the famed New York prosecutor Robert Morgenthau, who had been accused of bias against the notorious lawyer Roy Cohn.
“A man is not immune from prosecution just because a United States attorney happens not to like him,” Morganthau had said of Cohn, who later went on to represent Trump in the 1970s and 1980s.
The lawyers for the Trumps also argued that the law effectively barred James from having them answer questions under oath by investigators while she and the DA’s office were conducting criminal investigations of the Trump Organization.
The proper venue for such questions is a grand jury, they argued.
But Trump’s criminal defense lawyer Ron Fischetti then went a step further and argued it would be improper for James to use a grand jury to question the former president.
Engororon was skeptical of those arguments, saying that Trump and his children could refuse to answer questions in either venue by invoking their Fifth Amendment rights against self-incrimination.
The judge noted that Trump Organization executive Eric Trump had done just that hundreds of times during a deposition by James’ investigators.
Fischetti objected to that idea, arguing, in effect, that such a ploy would make the elder Trump look bad to the public.
“If he goes in and follows my advice [to refuse to testify under the Fifth Amendment] that’ll be on every front page in the newspaper in the world,” Fischetti.
“And how can I possibly pick a jury in that case?” Fischetti added, implicitly conceding the risk of criminal prosecution Trump is facing in the probe.
