Trump faces document trouble in New York fraud trial.

Trump faces document trouble in New York fraud trial.

At Mar-a-Lago, it’s the documents he kept that got Donald Trump in trouble.

New York Attorney General Letitia James recently filed a notice stating that she is ready for the upcoming fraud trial against former President Trump on October 2nd. However, buried within this notice is a warning – James may seek new penalties against Trump and the Trump Organization for the “spoliation” of evidence, specifically, the intentional failure to preserve documents or other evidence for pending or reasonably foreseeable litigation.

In cases of spoliation, potential penalties include fines and a contempt-of-court ruling. However, the most significant consequence of spoliation is the possibility of an “adverse inference” penalty. Should spoliation be proven, the judge in Trump’s trial, Justice Arthur Engoron, could infer that any missing evidence would have been harmful to the defense. This could significantly tip the scales in favor of the government, allowing the judge to interpret the missing documents in the worst possible light.

For Trump, facing a $250 million civil fraud lawsuit that seeks to run his company out of New York, this adverse inference penalty is something to be dreaded. Former New York Assistant Attorney General Kenneth Foard McCallion emphasizes the potential impact of James proving Trump or his co-defendants withheld evidence, stating, “It would allow an inference of guilt.”

The Dreaded ‘Adverse Inference’ Penalty

The adverse inference penalty is a powerful tool in any trial, especially one as high-stakes as Trump’s. It allows the judge to infer guilt based on any evidence that the defendants failed to turn over. In this case, it could significantly strengthen the government’s case against Trump and the Trump Organization in the civil fraud lawsuit.

To add to their case, James’ lawyers may also ask the judge to draw a similar adverse inference from the more than 400 times Trump pleaded the Fifth Amendment at a deposition, as well as the more than 500 times his co-defendants, son Eric Trump and ex-CFO Allen Weisselberg, also invoked the Fifth Amendment. These repeated invocations of the Fifth Amendment may also raise suspicion and further strengthen the government’s argument.

With discovery now complete and both sides having received each other’s trial evidence, Wallace, a lead attorney for James’ lawsuit, sent a warning in the recent notice to the judge. The Office of the Attorney General (OAG) reserves the right to seek relief after the trial relating to the defendants’ spoliation of evidence, although the specifics of the relief being sought are not mentioned.

Documents? What Documents?

The issue at hand revolves around the documents Trump allegedly failed to produce. Out of the hundreds of thousands of documents turned over to the attorney general by the Trump Organization, only ten came from Trump’s personal files, despite his role as the CEO of a multi-billion-dollar real estate and golf-resort business.

Trump’s argument, last presented during a hearing in April of last year, was that he simply had no documents to turn over. However, this argument did not hold up, and Judge Engoron imposed fines and issued a contempt-of-court finding against Trump. The contempt order was lifted only after affidavits were submitted, stating that Trump’s personal business documents had been thoroughly searched for but did not exist.

The existence of “Jackson affidavits,” as they are referred to, could come back to haunt Trump in a potential spoliation battle. These affidavits would serve as admissions that there were no missing or mislaid documents; instead, they were intentionally destroyed or hidden.

Trump’s “Stickies” Situation

According to Trump’s top corporate lawyer, Alan Garten, Trump regularly generated handwritten documents. Garten testified in response to a subpoena from the attorney general, stating that Trump used Post-it Notes and a black Sharpie to mark up appraisal drafts and other key documents. Trump’s routine use of these sticky notes led to the assumption that file cabinets containing his personal files existed.

However, none of the sticky notes or file cabinets were ever turned over to the attorney general in response to subpoenas for Trump’s personal business records. This raises questions about the completeness of the document production and suggests the possibility of intentional spoliation.

Proving Spoliation

Proving intentional spoliation is not an easy task. James’ lawyers bear the burden of proof and must demonstrate that the missing documents were intentionally hidden or destroyed after Garten testified about their existence. Sanctions are only warranted when evidence is knowingly destroyed or hidden, as mere negligence is not enough.

The lack of a document-retention policy within the Trump Organization may be a possible defense. Trump’s longtime executive assistant, Rhona Graff, stated that there was no set policy, and she did not even read Trump’s documents, let alone file them. However, if Trump claims his assistants handled his filing, Graff’s testimony may contradict him.

The Potential Consequences for Trump

The upcoming trial holds significant consequences for Trump. James’ lawsuit, filed in September of last year, alleges that Trump and top executives routinely manipulated the valuation of company assets by overstating or understating their value. These fraudulent valuations were used to secure loans and tax breaks, amounting to billions of dollars over a decade.

At the trial, lawyers will ask Justice Engoron to impose a $250 million penalty and revoke the Trump Organization’s corporate charter, effectively driving the company out of New York. Additionally, Trump and his two eldest sons could be banned from ever running a business in the state again and would be restricted from purchasing property or borrowing from a New York-registered bank for five years.

Trump’s defense against these allegations has focused on the complexities and subjectivity of property valuation, emphasizing that banks were willing to lend him money, and they profited from those loans. Trump’s lawyers have repeatedly stated their client’s eagerness to showcase the extraordinary success of his multi-billion-dollar company.

As the trial approaches, the missing documents and the potential spoliation battle loom large. While the burden of proof lies with James’ lawyers, they are not letting the missing-documents matter go. The outcome of this case could significantly impact Trump’s personal and financial standing.