Trump Foundation: How New York's growing case could impact the president

Joseph Spector | Albany Bureau

Show Caption Hide Caption NY suit against Trump Foundation explained In a lawsuit filed Thursday, New York’s Attorney General Barbara Underwood said President Donald Trump’s charitable foundation served as a personal piggy bank for his businesses, legal bills and presidential campaign. (June 14)

ALBANY, N.Y. – As President Donald Trump rails against the Robert Mueller investigation, New York officials are ramping up their inquiry into Trump's dealings with his now defunct foundation and could have an important cooperator: Michael Cohen, Trump's former lawyer.

Cohen's involvement is part of a broadening state investigation into the Trump Foundation, and Cohen's willingness to cooperate with a state subpoena this week could provide an immediate legal problem for the Trump White House as it grapples separately with the Mueller investigation.

"One of the things about going after the Trump Foundation as opposed to going after Trump the person is that the arguments can’t be raised that you can’t sue a president while he's president, or you can’t bring criminal proceedings against a president," said Vincent Bonventre, a professor at the Albany Law School.

The case against the Trump Foundation received a boost this week when the state Taxation and Finance Department subpoenaed Cohen, and he signaled his willingness to cooperate, according to state officials.

Aug. 22: Michael Cohen subpoenaed in New York's Trump Foundation probe

Barbara Underwood, the New York attorney general, filed a civil suit in June accusing Trump and his foundation of illegal conduct for more than a decade.

Now the state tax department is looking into any potential criminality as it pertains to New York tax laws because the foundation is based in the state.

Meanwhile, New York leaders are pushing for a new law that would close a state loophole that bans New York from prosecuting people who are pardoned by Trump.

Here's the latest:

Cohen subpoena

On Wednesday, the tax department confirmed it subpoenaed Cohen, just hours after he pleaded guilty in Manhattan federal court for breaking campaign finance laws and for his own illegal business dealings.

The subpoena came after Cohen's attorney Lanny Davis said Tuesday on CNN that Cohen had information that "would be of interest both in Washington and in New York state" as it relates to the Trump Foundation.

Davis was speaking during a CNN interview with Chris Cuomo, the New York governor's brother.

Cohen's willingness to cooperate is expected to help New York on two tracks: A civil case by the Attorney General's Office into the operations of the Trump Foundation and a criminal investigation into whether any tax laws were violated.

July 19: Trump Foundation investigated over possible N.Y. state tax law violations

"As our lawsuit against the Trump Foundation illustrates, we will hold Donald Trump and his associates accountable for violations of state law, and will seek a criminal referral from the appropriate state agency as necessary," Underwood spokeswoman Amy Spitalnick said in a statement.

Trump panned the lawsuit after it was filed.

"The sleazy New York Democrats, and their now disgraced (and run out of town) A.G. Eric Schneiderman, are doing everything they can to sue me on a foundation that took in $18,800,000 and gave out to charity more money than it took in, $19,200,000," Trump wrote.

"I won’t settle this case!"

The sleazy New York Democrats, and their now disgraced (and run out of town) A.G. Eric Schneiderman, are doing everything they can to sue me on a foundation that took in $18,800,000 and gave out to charity more money than it took in, $19,200,000. I won’t settle this case!... — Donald J. Trump (@realDonaldTrump) June 14, 2018

Two tracks

The state tax department launched an investigation into the Trump Foundation in July after Underwood sued the charity, accusing it of aiding Trump's self-interests and his 2016 presidential campaign.

Now the two agencies appear to be working more closely.

On Thursday, Underwood reportedly opened a criminal tax investigation into Cohen as it relates to the Trump Foundation and his own dealings.

Underwood has asked the state’s tax department for a referral on Cohen, which is needed for New York's Attorney General's Office to open a criminal probe, according to the New York Times.

There was no immediate comment from Underwood's office on its latest actions.

The state's cases center on the Trump Foundation taking in millions of dollars in donations, but then allegedly steering money to Trump's election bid in 2016 and to settle legal claims against his private golf clubs.

That's not all.

The Times reported Thursday that Manhattan District Attorney Cy Vance is investigating possible criminal charges against the Trump Organization and company officials related to Cohen making a $130,000 hush-money payment to adult film actress Stormy Daniels.

State cases could add a significant twist: President Trump would be unable to pardon people convicted solely of state crimes.

And investigators probably would have an easier time of building a state case rather than a federal case against a sitting president, Bonventre said.

"They’ll be able to subpoena all kinds of documents. They’ll be able to depose people who work with the Trump Foundation," he said.

"You don’t have those roadblocks you would have in a case against Trump the person."

I’m calling on the NY Legislature to close the double jeopardy loophole and ensure wrongdoers cannot escape justice.



President Trump: You can't pardon someone just because they're going to testify against you.https://t.co/CN333N9Hhy — Andrew Cuomo (@andrewcuomo) August 23, 2018

Double jeopardy

New York Gov. Andrew Cuomo, a Democrat, has railed against the Trump administration and has directed his administration to look into the Trump Foundation.

But he and other state leaders are also moving on a separate path, too.

They want to close a loophole in state law that currently prohibits New York from going after any official who receives a presidential pardon, which Trump is believed to be considering in the case of former campaign head Paul Manafort, who was found guilty Tuesday on eight of 18 counts in a financial fraud trial, and possibly Cohen.

"The conviction of Paul Manafort and the guilty pleas from Michael Cohen send a clear message that nobody is above the law, including the President and his acolytes," Cuomo, who is seeking re-election this year and is a potential 2020 presidential candidate, said in a statement.

June 14: N.Y. attorney general sues Donald Trump, Trump Foundation, accusing them of illegal conduct

"But President Trump has shown that he is willing if not eager to abuse his executive authority, including pardon power, to protect himself."

Cuomo said the loophole in state law needs to be closed in order for the state to pursue its cases without fear Trump might first pardon the players.

It would require a law change by the state Legislature, which isn't set to reconvene until January.

The Attorney General's Office said it has long sought to close that loophole.

"President Trump has repeatedly abused his pardon powers to undermine the rule of law and, especially in light of recent events, it’s more urgent than ever that the state Legislature act," Spitalnick said.

Among the pardons Trump has already given out are those to former Sheriff Joe Arpaio and Dinesh D'Souza.

Follow Joseph Spector on Twitter: @GannettAlbany