Trump indictment: Understanding significance of falsification of records charge

The big indictment of Donald Trump came across as bit underwhelming to many. Trump was charged with 34 cases of “falsification of business records” elevated to a felony because of “intent to conceal another crime,” which, it appears, was never committed. Really? That was it?

Is it the case of a featherweight criminal charge for a heavyweight politician and former world leader?

For all the things Trump is insinuated to have done—including boosting the values of his real estate holdings by hundreds of millions of dollars and then reducing the same to evade taxes—this falsification of records case based on a $130,000 hush money payoff is all there is against the former US presdient?

Yes, for now. And no, that is not all there is to the falsification charge.

Falsification of business records is a petty offense, a misdemeanor in New York, points out business and criminal defense attorney Andrew Miller.

Now, says Miller, if it is done to defraud someone, then it is a crime, even if the fraud was not committed. It is intent that matters.

In fact, that is how the case against Trump was built. Falsification of business records to repay former Trump attorney Michael Cohen for a mortgage he took, allegedly under the direction of Trump, to pay hush money to an adult film actress to stop her from revealing an affair with Trump before the 2016 elections. Trump denies the affair, and she did not tell her story before the elections that Trump won.

But things did not stop there, the fact sheet accompanying the indictment reveals. Trump then cooked up a scheme, says the Manhattan District Attorney’s Office through its fact sheet, to repay Cohen, falsifying the records as payments for legal fees for services rendered in 2017. The implication here is that not only was the scheme covering up what the DA termed as fraud on the American voters who were denied the knowledge of the accusation, but it was also a setup for tax fraud.

The magnitude of that can be understood by looking at a general example. If a corporation had a taxable income of $500,000 and a tax rate of 21 per cent, its tax liability before the deduction would be $105,000 (21 per cent of $500,000). If the corporation deducted a $130,000 expense, its taxable income would be reduced to $370,000, and its tax liability would be reduced to $77,700 (21 per cent of $370,000). This would result in tax savings of $27,300 ($105,000 - $77,700). It is important to note that this is only an example, not derived from Trump's business records.

The indictment does not say that a tax deduction was ever claimed, but it does show that business records substantially increased the $130,000 amount, implying the set-up for a larger financial fraud.

Attorney Miller points out, however, that only intention is necessary to charge the crime. Miller uses the analogy of a man entering a bank vault under false pretenses – claiming he had the right to be there though falsified documents – it is a misdemeanor. If it is found he loaded his briefcase with all the tools one would need to commit bank robbery, even if he never robs the bank, it is a felony—attempted bank robbery.

Before the robbery is committed, it is a simple trespassing charge, reiterates Miller; but proving intent to rob the bank makes it a bank robbery charge. That is the challenge faced by Manhattan DA Alvin Bragg. He has to prove that intent.
Former Trump attorney and self-described “fixer: Michael Cohen, now turned state’s witness,” says Bragg has all the documents to prove it.

But barring that proof, is it a “nothing” case? Why charge someone with what appears to be an accounting entry error? It happens millions of times across the United States, critics say. It would be impossible to charge everyone, including every mom and pop, and it just does not happen. So, then, why charge Trump?

It is important to note that we are not talking about a business in the backwaters of North Dakoka, says Miller. The charges against Trump are for crimes committed in New York City, which is the business and finance capital of the US and it is important to ensure that such crimes are not committed to safeguard the city's status as the business centre of the world. That is not just a boastful claim. By the world order established in Bretton Woods after WWII, the vast majority of international financial transactions go through New York. The city is in a unique position in the world, and it has the right and obligation to ensure that business records that run through New York.

According to the FBI's Uniform Crime Reporting (UCR) Programme, which collects crime data from law enforcement agencies across the US, there were over 1,000 cases of business falsification in the United States per year dating back to 2017. UCR notes that not all cases of falsification of business records are included in this data, because it is only based on instances reported to law enforcement agencies.

It should be noted that whether cases are eventually reported to law enforcement depends on various factors such as the severity of the crime and the evidence available. Prosecutors then have the discretion on whether to proceed.

What Republicans, Trump loyalists, skeptics, and Trump himself are saying, then, is that Trump should be treated differently than the thousands of Americans who falsified business records. They claim loudly that the evidence is just not there, to warrant the filing of charges in the first place. Many are angry that Braggs did not exercise his prosecutorial discretion to decline to proceed. They assign that to politics and a partisan attack.

However, this should be evaluated in the context of a decision made by DA Bragg on the investigation by his predecessor Cyrus Vance. Bragg decided to bring charges on this case and used his prosecutorial discretion to delay or permanently shelf charges on the multi-million-dollar business valuation investigation against Trump, surely a splashier charge.

As it turned out, the unsealing of the indictment showing the expected 34 counts of falsifying business records was seen by some as underwhelming, and undeserving by many who argue that it is a minor offense that happens millions of times across the country. New York City, however, is not the rest of the country; it is the global financial centre through which transactions affecting the lives of people around the world take place.

It is not too much to ask for a person who was responsible for following the Constitution and the laws of the United States, and whose decisions held in balance the lives and futures of most of the world, to be held to account by the same laws, says Miller.