Problem for the Trump Indictment: Is There Any Precedent for an Internal Business Record? (Plus Preemption Problems!)

Here is the indictment. Here is the statement of facts. The Manhattan DA’s charges are based on New York’s false filing law, NYPL 175.10, but remarkably enough, we still don’t know that the underlying “other” crime is. Tax fraud? (Hard to prove a fraud and a loss if Trump paid Cohen to pay the tax liability). A campaign violation? (A federal campaign case is very likely preempted by federal law, and state laws confirms federal preemption — meaning it is not in state jurisdiction.) More below on the seemingly unprecedented use of this criminal statute and “intent to defraud” based on an entirely internal business record that others likely will never see.

[UPDATE: What a mess today. An embarrassment to the rule of law. Maybe a political disaster, if it plays out in favor of Trump. And unfortunately it might. Now that Manhattan DA Alvin Bragg has clarified in a press conference that the underlying crime is a campaign violation, I’ll address the massive preemption problem briefly with links to my tweets here (with text of FECA preemption clause), here (on the state law confirming fed preemption), and here (on Teper v. Miller, no preemption if the state law is tangential — and I think it’s a very hard case to say that a state can turn a federal filing rule into a state filing crime), and later in a follow-up post. Bottom line 1: Even if I’m wrong on the preemption merits, this case is headed to SCOTUS on federal preemption, just like Trump v. Vance, based on 28 USC 2283, Section 1983, and FECA. Bottom line 2: NY state law confirms that this is likely federal jurisdiction, not state jurisdiction. If there are federalism doubts, this NY state law will allow the conservatives to say “NY state agrees that they don’t have jurisdiction on federal campaign filing matters.” The Manhattan DA will likely lose in federal court on this entire case if it is based on a federal campaign, and rightly so: We also don’t want red state prosecutors using state law to prosecute federal campaign laws].

But before we address on a potential tax interpretation or federal preemption of any campaign violation, there is already a problem in the case that we actually know: Can an internal business record be the basis for an “intent to defraud” under NYPL 175.10, if it is unlikely any third party would “rely” on it in a way identifiable as part of fraud? Is there a New York precedent answering that it can be? So far, legal experts vocally arguing for this 175.10 case have not answered this question…

Here is the NYPL 175.10 “Falsifying Business Records” charge:

“A person is guilty of falsifying business records in the first degree when he commits the crime of falsifying business records in the second degree, and when his intent to defraud includes an intent to commit another crime or to aid or conceal the commission thereof. Falsifying business records in the first degree is a class E felony.”

The indictment does not reveal what the “other crime” was. By itself, that’s a stunning silence from the Manhattan DA. But back to what we do know: the requirements of NYPL 175.10, the kind of “false record” and “intent to defraud.”

Yes, the statute mentioned a “business record” broadly, but it may be hard to show an “intent to defraud,” i.e., intent to defraud other people, if the business record is a purely internal record that others are highly unlikely to see or rely upon.

For over a week, several of us have been publicly asking this question to several legal experts and professors arguing for this kind of indictment for an internal business record: “Has there been a conviction for a false business record that was internally held, and not for use or reliance by third parties, even if it was required by state law to be kept as a record?”

Here’s another version of this question, which NBC News’s Laura Jarrett asked these experts on March 28: “Interested if you find any cases where the false records are *purely* internal – i.e., never viewed by a third party like tax agency/insurer, much less public.”

Seemingly in response to our questions, Ryan Goodman points to his co-written piece in Just Security from Monday, April 4. In the introduction, they cited statutes requiring these records, but that’s not the same thing as a case applying NYPL 175.05 or 175.10 and “intent to defraud” to such an internal document. He also posted a thread of “true experts,” but it also had no cases cited, just prosecutors saying this was a practice.

The bottom line: After a week of asking, I don’t see an answer to this question: No cases cited upholding an NYPL 175 conviction based on an internal business record (i.e., a record that others are not likely to rely on).

Here’s the essay, and below, I go through each of the cases that were analyzed in the essay for the question of “intent to defraud”: “The Broad Scope of “Intent to Defraud” in the New York Crime of Falsifying Business Records”

Here are each of the cases analyzed in this Just Security post, and here is a summary or quotation from the case or the essay about the kind of document that was the basis for the false filing:

People v. Kase, 1980: Kase’s filed instrument was an application to transfer a liquor license in connection with the sale of a tavern. 76 A.D.2d 532 (N.Y. App. Div. 1980)

Sosa-Campana, 167 A.D.3d 464 (N.Y. App. Div. 2018): “When defendant was stopped for a traffic violation and presented a fraudulent driver’s license in the name of another actual person.”

Morganthau v. Khalil is cited, but it was a different posture: it was one charge among many as the basis of a civil forfeiture, a forfeiture that seems to be valid on the basis of the entire scheme – the other charges seem to be a sufficient basis. There is no argument and analysis about this question.

73 A.D.3d 509 (N.Y. App. Div. 2010). Summary of the underlying case:

“Defendant, conspiring or acting in concert with two other individuals, engaged in an illegal check cashing scheme and circumvented federal and state banking laws by structuring numerous check cashing transactions and falsifying business records to make it appear that the checks were cashed in several different locations when they were in fact all cashed in a single location that was owned and operated by defendant’s alleged co-conspirators.

People v. Reyes: 69 A.D.3d 537, 538–539, 894 N.Y.S.2d 43, 44–45 (N.Y. App. Div., 1st Dept. 2010). 

“At the time of the alleged rape, defendant’s [prison guard] assignment was  to remain in a glass-enclosed control room overlooking two housing units. The falsifying business records counts were based on defendant’s false logbook entry that at the time in question he was helping to escort inmates to the mess hall.”

This logbook appears fundamentally different from an internal private business record, as it would be used as an official record in reliance as part of prison security.

 People v. Coe, 131 Misc.2d 807, 812, 501 N.Y.S.2d 997 (N.Y. Sup. Ct. 1986).  Like Reyes, here is a similar official hospital record, used in reliance for health care treatment: “A nurse was charged with falsifying business records by omitting information in her nursing notes recording mistreatment which preceded the death of her patient.”

People v. Ramirez: “The 1990 Fourth Department case of People v. Ramirez, for example, also approved the trial court’s jury direction on this definition of “intent to defraud.” The defendant allegedly used false information to apply for credit cards to purchase store merchandise.” 

People v Elliassen: “In the 2008 decision, the Richmond County Supreme Court (within the Second Department) held that the intent to defraud required no pecuniary loss, and that interference with the legitimate public administration of the NYPD sufficed.” This is not the same statute, and it was not a filing, but a failure to file “the juvenile log report or the UF 250 stop and frisk report relating to their interaction with Rayshawn Moreno.”

People v. Headley: “The indictment alleges that defendant and the co-defendant Jacqueline Jackson fraudulently obtained paid assignments from the New York City Transit Authority (hereinafter “NYCTA”) to procure independent medical examinations of plaintiffs who had sued the NYCTA. Defendant is charged with obtaining the NYCTA vendor assignments for his company by using a fictitious name.” 37 Misc. 3d 815, 951 N.Y.S.2d 317 (N.Y. Sup. Ct., Kings County 2012). 

People v. Schrag: this single decision in this case is unclear and very brief, but it seemed to turn on the duty, at p. 520: “A review of the Grand Jury minutes has convinced this Court that sufficient evidence was presented to the Grand Jury to show that the nature of defendant’s position as a police officer imposed such a duty upon him.” 147 Misc.2d 517, 520 (June 8, 1990). 

People v. Norman, 6 Misc. 3d 1035(A), 800 N.Y.S.2d 353 (N.Y. Sup. Ct., Kings County 2004), “the Supreme Court of Kings County held that a defendant causing false information to be entered by a campaign committee and [submitted to] the Board of elections was sufficient to satisfy intent for falsifying business records.” In People v. Keller, “Defendants who ran an escort service did not intend to defraud a credit card company by falsely billing clients for “limousine service” instead of escort services on charge slips.” 176 Misc. 2d 466, 673 N.Y.S.2d 563 (N.Y. Sup. Ct. 1998).


Author: Jed Shugerman

Jed Handelsman Shugerman is a Professor at Fordham Law School. He received his B.A., J.D., and Ph.D. (History) from Yale. His book, The People’s Courts (Harvard 2012), traces the rise of judicial elections, judicial review, and the influence of money and parties in American courts. It is based on his dissertation that won the 2009 ASLH’s Cromwell Prize. He is co-author of amicus briefs on the history of presidential power, the Emoluments Clauses, the Appointments Clause, the First Amendment rights of elected judges, and the due process problems of elected judges in death penalty cases. He is currently working on two books on the history of executive power and prosecution in America. The first is tentatively titled “A Faithful President: The Founders v. the Unitary Executive,” questioning the textual and historical evidence for the theory of unchecked and unbalanced presidential power. This book draws on his articles “Vesting” (Stanford Law Review forthcoming 2022), “Removal of Context” (Yale Journal of Law & the Humanities 2022), a co-authored “Faithful Execution and Article II” (Harvard Law Review 2019 with Andrew Kent and Ethan Leib), “The Indecisions of 1789” (forthcoming Penn. Law Review), and “The Creation of the Department of Justice,” (Stanford Law Review 2014). The second book project is “The Rise of the Prosecutor Politicians: Race, War, and Mass Incarceration,” focusing on California Governor Earl Warren, his presidential running mate Thomas Dewey, the Kennedys, World War II and the Cold War, the war on crime, the growth of prosecutorial power, and its emergence as a stepping stone to electoral power for ambitious politicians in the mid-twentieth century.

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