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naraburns  nihil supernum  1yr ago (text post)   34973 thread views

Culture War Roundup for the week of April 3, 2023

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I am not convinced that "legal expenses" is technically a false statement. How should he record payments to people when they sign NDAs?

We of course don't know yet precisely what the allegations are, but this does not strike me as particularly convincing. I would think that "legal expenses" are expenses paid for legal services. Why should payment pursuant to an NDA be a "legal expense" if payment pursuant to other contracts are not? Note that I am not arguing that Trump is or is not guilty, nor that the prosecution is or is not legitimate.

I would read "cost incurred in connection with" etc as costs related to negotiation, etc, etc, etc, but not the payment of the settlement itself. Just as legal costs (and attorneys fees, when available) are awarded to plaintiffs separately from the underlying recovery.

Edit: As it turns out, the DA's factual allegations are here. It claims:

The Defendant, the TO CFO, and Lawyer A then agreed that Lawyer A would be paid the $420,000 through twelve monthly payments of $35,000 over the course of 2017. Each month, Lawyer A was to send an invoice to the Defendant through Trump Organization employees, falsely requesting payment of $35,000 for legal services rendered in a given month of 2017 pursuant to a retainer agreement. At no point did Lawyer A have a retainer agreement with the Defendant or the Trump Organization.

In early February 2017, the Defendant and Lawyer A met in the Oval Office at the White House and confirmed this repayment arrangement.

On or about February 14, 2017, Lawyer A emailed the Controller of the Trump Organization (the “TO Controller”) the first monthly invoice, which stated: “Pursuant to the retainer agreement, kindly remit payment for services rendered for the months of January and February, 2017.” The invoice requested payment in the amount of $35,000 for each of those two months. The TO CFO approved the payment, and, in turn, the TO Controller sent the invoice to the Trump Organization Accounts Payable Supervisor (the “TO Accounts Payable Supervisor”) with the following instructions: “Post to legal expenses. Put ‘retainer for the months of January and February 2017’ in the description.”

Lawyer A submitted ten similar monthly invoices by email to the Trump Organization for the remaining months in 2017. Each invoice falsely stated that it was being submitted “[p]ursuant to the retainer agreement,” and falsely requested “payment for services rendered” for a month of 2017. In fact, there was no such retainer agreement and Lawyer A was not being paid for services rendered in any month of 2017.

I agree that the amount of a settlement would not be included as "cost incurred in connection with". It would be included in the other clause "the amount of, ... ,any settlement of any claim."

You're right, I did not see that. But as you noted, that is a federal law, and we don't know what NY law says

The allegation is that there was "no such retainer agreement." This is reading retainer in the narrow sense of "a fee paid upfront by the client to secure the services of an attorney." However, there are other definitions of retainer, such as "A contract between attorney and client specifying the nature of the services to be rendered and the cost of the services." Bragg claims there was an agreement between Trump and Cohen, with consideration, so there was a contract.

"Retainer agreement" has a pretty clear and accepted meaning under the law. A lawyer can't even ethically bill a client without a signed written letter of engagement or a signed retainer agreement. A simple contract in the form of an offer and acceptance does not constitute a retainer agreement. Moreover, in the law:

Essentially, three types of retainers exist, being (1) Classic or True Retainers, (2) Security Retainers, and (3) Advance Payment Retainers. See In re McDonald Brothers Construction, Inc., 114 B.R. 989 (N.D.Ill.1990). Classic Retainers refer to the payment of a sum of money to secure availability over a period of time. Entitlement to the fee exists whether or not services are ever rendered. Noting that the specific language in Paragraph 2 relates that the retainer fee may be subject to review by the Bankruptcy Court and that the Agreement specifically calls for representation in these proceedings, this Court 38*38 finds and holds that it was not the intent of Applicant or Debtor that this retainer be a Classic Retainer designed solely to secure the availability of the Applicant over a period of time.

The other two types of retainers are the Security Retainers and Advance Payment Retainers. The Security Retainer is typified by the fact that the retainer will be held by the attorneys to secure payment of fees for future services that the attorneys are expected to render. In such an agreement, the money given as a retainer is not present payment for future services. Rather, it remains property of the Debtor until the attorney applies it to charges for services actually rendered, and any unearned funds are returned to the Debtor.

The third type of retainer, the Advance Payment Retainer, is an agreement whereby the Debtor pays, in advance, for some or all of the services that the attorney is expected to perform on the Debtor's behalf. This type of retainer differs from the Security Retainer in that ownership to the funds is intended to pass to the attorney at the time of payment. Under California law, the issue of whether ownership of these funds passes to the attorney upon receipt is largely undecided. See Katz v. Workers' Compensation Appeals Board, 30 Cal.3d 353, 356 fn. 2, 178 Cal.Rptr. 815, 636 P.2d 1153 (1981); Baranowski v. State Bar, 24 Cal.3d 153, 164, 154 Cal.Rptr. 752, 593 P.2d 613 (1979).

In re Montgomery Drilling Co., 121 BR 32, 37 (Bankr. Court, ED Ca 1990)

Note that all involve some sort of advance payment, which was not the case here. Also note that the link you provide is not to a legal dictionary. I would be very surprised if his attorneys make this argument.

The major question is whether Trump is guilty of another crime. My understanding is that the factual claims are that Trump committed another crime, not that he attempted another crime. This runs into the issue of the presumption of innocence. Until he is convicted of the Federal crime, the court should (I think) presume that he is innocent. If he is innocent, then he has not committed fraud as lying about non-crimes is not actionable.

  1. As you note, all they need show is that he intended to commit another crime, rather than that he attempted or did commit another crime.

  2. Even if they have to show he committed a crime, the fact that he is presumed innocent does not mean that he has to be convicted; the jury must merely find that he in fact committed another crime. And, that might well be very simple: If, for example, the payment to Daniels was legally required to be reported as a campaign contribution (a matter of law), then the court will simply instruct the jury, very roughly, "if you find that defendant committed the crime of falsifying business records, you must then determine whether that was a felony or a misdemeanor. If you find that defendant failed to report the payment as a campaign contribution, then you must find the defendant guilty of a felony." Were this a statute that required a prior conviction, that would of course be different.

  3. Lying about non-crimes is actionable, but it is only a misdemeanor.

state juries are not really competent to decide that as it is a matter for Federal courts.

? I don’t know why they would be less competent. They are basically drawn from the same pool -- ie, US citizens.

don't believe a state court can find someone guilty of a federal crime.

They can't convicted them of a federal crime. But they can certainly find that, as a factual matter, they committed that crime. Just as they can find that he committed an NY crime, even if they can't convict him, because of statute of limitations problems.

How do you establish that Trump knew the technicalities of what a retainer is?

The guy has probably signed a zillion retainer agreement in his day. Jorors aren't morons. Beside, the gravamen of the argument is that there was no preexisting agmt for legal services, retainer or otherwise.

Lying is not actionable unless it involves a fraud. There has to be someone harmed,

Yes, but that is a different argument.

the state can be harmed if its ability to regulate is impeded

Which goes to the whole point of business records laws. They exist to permit auditors and investigators to be able to sniff out potential wrongdoing. Eg if I pay the Robert Forster character 150k to make my henchman disappear, and I have to record it as vacuum cleaner repair, that is going to raise a red flag. If I can instead have my lawyer pay it and record his reimbursement as attorney's fees, there will be no red flags. Given that that gambit probably predates Al Capone, I am skeptical that that loophole was not closed long ago.

Look, Trump has many potential defenses, including that his motive for all this chicanery was to hide the incident from his wife. But the argument that the records were accurate does not seem to be one. Esp given that he apparently paid Cohen extra to cover the income taxes he would owe on those "fees."

So the books and records of the Trump Organization show the payments to Cohen (which would ultimately go to Stormy Daniels) as a corporate legal expense. That would end up being claimed as a business expense on the corporate tax return.

I think you could argue that Cohen negotiating a hush money agreement with Stormy Daniels was legal work, in which case he could bill the actual hush money as a disbursement, and paying a lawyer's bill including disbursements could be included as a "legal expense" in the accounts. But it would be the Trump Organization paying Trump's personal legal expenses, which would need to be accounted for as an employee fringe benefit. I am not familiar with US tax law, but in the UK that would be taxable on the employee (i.e. Trump).

I think you could argue that Cohen negotiating a hush money agreement with Stormy Daniels was legal work, in which case he could bill the actual hush money as a disbursement, and paying a lawyer's bill including disbursements could be included as a "legal expense" in the accounts.

The work Cohen did to negotiate the deal is obviously legal work. But the disbursement isn’t. The whole point of the law is to prevent the hiding of iffy transactions through that sort of subterfuge. Eg: A gangster who has his lawyer hire a hit man, or buy heroin, or bribe a politician, and then reimburses him for his "legal expenses."

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