White-Collar Crime

Ivanka And Don Jr. Avoided Indictment The Old-Fashioned Way: By Being Rich

'You couldn’t have had a better e-mail trail.'

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A meticulously researched article published overnight — a joint effort by The New Yorker, Pro Publica, and WNYC — reveals the sordid history of the abortive effort to prosecute Ivanka and Donald Jr. for real estate fraud. The incriminating email trail was there. The victims were, for awhile, cooperating. But it all came to an abrupt close when Marc Kasowitz, a hefty donor to District Attorney Cy Vance, went over the heads of the career prosecutors and convinced the DA to scuttle the investigation.

While he now denies it, Kasowitz is credited as saying it was “amazing I got them off.”

It really isn’t. Outsiders may read the last-minute intervention of a donor as a nefarious quid pro quo, and for those of us who adhere to the “avoid even the appearance of impropriety” standard, the circumstances aren’t flattering for Vance. But Vance understands his ethical obligations and is returning the money — he wasn’t bought off here. But the blow-by-blow of this case is a glaring reminder that affluent targets don’t need any quid pro quo to turn their wealth into a get out of jail free card. At every turn of this investigation — which ended on the cusp of a grand jury — the kids were able to subvert the ordinary churn of the wheels of justice. And Vance was right there letting it all happen without lifting a finger.

The case revolves around the ill-fated Trump SoHo, a luxury development that I assume boasts copious amounts of gold-plating. For what it’s worth, the development isn’t even in SoHo, a misleading statement that in the grand scheme of things seems pretty minor:

Business was slow, but the Trump family claimed the opposite. In April, 2008, they said that thirty-one per cent of the condos in the building had been purchased. Donald, Jr., boasted to The Real Deal magazine that fifty-five per cent of the units had been bought. In June, 2008, Donald, Jr., and Ivanka, alongside their brother Eric, gathered the foreign press at Trump Tower in Manhattan, where Ivanka announced that sixty per cent had been snapped up. “We’re in a very fortunate position where we have enough sales, and now we are strategically targeting certain buyers,” she said.

None of that was true. According to a sworn affidavit by a Trump partner filed with the New York Attorney General’s office, by March of 2010, almost two years after the press conference, only 15.8 per cent of units had been sold.

There’s puffery and then there’s radically misrepresenting an investment in an effort to defraud. Where this falls between those poles is, apparently, the divide between Cy Vance after a 20-minute meeting with a prominent donor and the prosecutors and their supervisors who worked on this case and reviewed the evidence day in and day out for months. That’s no guarantee that Vance’s prosecutors were in the right. It’s not unheard of for prosecutors to develop tunnel vision working on a matter and losing sight of the big picture. Still, as Paul Grand — who was on the defense team — described the decision to kill this case, “the manner in which it was accomplished is curious.”

But Grand’s only talking about Kasowitz’s parachuting into the case at the last second for the final conference with Vance. The months of meetings with prosecutors and PowerPoint presentations and the whole “internal appellate process” that Grand views as standard operating procedure is already, when you think about it, a hell of a privilege. There was no midday perp walk out of Trump Tower. Long before Vance summarily ended this case, the Trumps were already receiving breaks that Vance wouldn’t afford in, say, a white-collar case against a Chinese community bank.

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Bringing us to Kasowitz’s involvement. Now, to his credit, Vance returned Kasowitz’s $25K donation before the meeting, in keeping with his standard practice when donors have matters with his office. Unfortunately, less than 6 months after killing the Trump prosecution, Kasowitz raised over $50K for Vance. Now, four years after the fact, Vance is going to return that money too. But campaign funds don’t really matter for Vance. He replaced a guy who had the job for 35 years. There’s not exactly a robust challenge in the offing.

Frankly, the campaign money is a red herring.

Understanding the real problem requires a step back. As the Trumps skated despite the fact that, as one person familiar with the investigation put it, “you couldn’t have had a better e-mail trail,” Vance’s office doggedly went after programmer Sergey Aleynikov no matter how many legal setbacks that case suffered until they managed to finally put him in jail — all to appease Goldman Sachs in crushing a former employee. And there was the merciless — and, to be honest, kind of racist — effort to prosecute small, family-run Abacus Bank as “emblematic” of the housing fraud while assiduously declining to prosecute the larger banks at the center of that fraud. When the rich and powerful want someone squashed, this office seems to have no problem going forward and wasting massive resources in the process. But when the powerful lawyers, hired by the powerful people walk into the room, suddenly the greatest e-mail trail ever takes a back seat and the targets get every benefit of the doubt.

In one e-mail, according to four people who have seen it, the Trumps discussed how to coordinate false information they had given to prospective buyers. In another, according to a person who read the e-mails, they worried that a reporter might be on to them. In yet another, Donald, Jr., spoke reassuringly to a broker who was concerned about the false statements, saying that nobody would ever find out, because only people on the e-mail chain or in the Trump Organization knew about the deception, according to a person who saw the e-mail. There was “no doubt” that the Trump children “approved, knew of, agreed to, and intentionally inflated the numbers to make more sales,” one person who saw the e-mails told us. “They knew it was wrong.”

If this is the sort of evidence that Kasowitz managed to brush aside in a matter of minutes, no wonder the elder Trump wanted to put him in charge of the Russia probe.

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As one might expect when reasonably well-off people feel screwed over in an investment, the people who bought into Trump SoHo filed a civil suit against the Trump kids and assisted prosecutors in building the case. When the Trumps settled the civil suit, they secured a pledge from the plaintiffs that they would no longer assist the prosecution unless subpoenaed. That’s the kind of life-saving settlement that only the best money can buy. The plaintiffs’ attorney, noted anti-dog racism advocate Adam Leitman Bailey, even wrote a letter to the DA’s office stating that they did not believe the Trumps violated any criminal laws.

In our interview with Vance, he said that he had never before seen a letter where plaintiffs in a civil case asserted that no crime had been committed. “I don’t think I’d ever received a letter like it,” Vance said. He calls it a “significant and important” communication.

While most prosecutors — indeed most people — would view this sudden reversal with skepticism, Vance apparently took it at face value. Shouldn’t this at least set off an alarm that the targets of the investigation had just bought themselves cover? It’s at least worth, you know, investigating.

Certainly, prosecutors could subpoena the buyers of Trump condos. But they feared the witnesses would undercut the criminal case by claiming they weren’t victims of a fraud.

First of all, this is silly. Considering Bailey had been assisting prosecutors, the office should have had more than enough to grill any victim trying to change their story based on prior statements. Second, even if this was a reasonable fear when the case was running full steam ahead, at the point you’re considering closing down the investigation, what do you have to lose? Bring in a couple of victims and see what they’d say when the gravity of a subpoena sets in. The worst that can happen is they justify killing the case, and they just might provide incriminating testimony.

It could well be that the Trumps did nothing criminal in publicly lying to investors about the value of the property — though that sentence doesn’t sound great — but why was this case not worth pursuing? Especially in light of the lengths this office goes to when it’s going after people who don’t have instant name recognition.

There are a lot of ways to beat a criminal probe. Being rich is still one of the best. Ideally, a prosecutor is sensitive to those advantages and acts accordingly. Sometimes they don’t.

How Ivanka Trump and Donald Trump, Jr., Avoided a Criminal Indictment [New Yorker]

HeadshotJoe Patrice is an editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news.

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