Donald Trump has fought vigorously for the past four years to keep his tax records private and out of the hands of Cyrus Vance the Manhattan district attorney.
The recent release of his tax documents has taken the criminal investigation into Trump and his business into what could be a perilous phase for Trump.
Trump has battled in and out of the court system to keep his tax documents out of Vance’s hands. However, this week the Supreme Court ruled that Trump must release his tax documents to Vance and his investigators.
Vance and his team now have a difficult task ahead of them. Vance has brought in outside experts, which includes a forensic consulting firm, to help go over the massive collection of records in an attempt to locate improprieties.
“This is an exercise in very, very detailed digging in areas that are, for most of us, very arcane,” said Anthony Siano, who worked on financial fraud cases as a federal prosecutor in Manhattan and Brooklyn.
“There’s no magic to this,” added Siano. “It’s incredibly tedious work.”
The materials that Trump fought four years to keep out of the prosecutor’s hands go far beyond tax documents. Mazars USA, Trump’s longtime accounting firm, was ordered to turn over “any and all statements of financial condition, annual statements, periodic financial reports, and independent auditors’ reports.”
On Monday the subpoena was enforced and millions of pages of documents were handed over to Vance’s office.
It is very likely that the treasure trove of information will provide prosecutors with valuable material, stated Andrew Weissmann, a former federal prosecutor.
“The value of the Mazars documents is not in the disclosure of tax returns: that is available to law enforcement from the tax authorities,” said Weissmann.
“Accounting records enable a prosecutor to see how the reported tax numbers were calculated. The underlying data is key to proving criminal intent, as it was in the Manafort investigation.”
Manafort was serving seven years in prison for several offenses including tax fraud. Trump pardoned Manafort in December.
It is expected that the forensic accountants that Vance has hired will build an expansive timeline using Trump’s tax and bank records as well as communication between Trump and his bank and tax preparers.
The accountants will zero in on any discrepancies between the information presented to banks and those provided to tax authorities.
Michael Cohen, Trump’s former personal attorney and “fixer” has accused Trump of inflating his assets when seeking a loan and devaluing them in statements to the government to avoid paying the proper amount of taxes.
“The tax returns can also help illuminate whether other financial documents are false,” said Chuck Rosenberg, a former federal prosecutor.
“If the value of a particular property is low on a tax return (to avoid taxes) but high on a loan application (to demonstrate creditworthiness) that certainly raises questions,” Rosenberg said.
The court filings that Vance has made so far indicate that he is pursuing an extremely broad investigation. The investigation includes falsifying business records, insurance, and tax fraud.
One of the issues under scrutiny is Trump’s Seven Springs estate in Westchester County, N.Y. Vance subpoenaed documents from three towns that the property runs through after New York Attorney General Letitia James opened a civil investigation.
James’s investigation is centered on whether the Trump Organization overinflated the value of the 213-acre Seven Springs estate as well as three other properties to secure bank loans and tax benefits from a donation of a conservation easement.
“The problem for prosecutors is that there are likely many layers between Trump and his tax return — accountants and bookkeepers and lawyers who all had some role in compiling the returns and valuing assets,” Rosenberg said.
“These multiple layers require lots of work and lots of interviews by agents and prosecutors to figure out how the returns were assembled and if they are demonstrably and intentionally false. This was not Trump with a laptop on TurboTax, and so it will take some time.”
“Documents alone are rarely enough to prove a criminal case,” Weissmann added. “They can be powerful corroboration, but a cooperating insider or tape recordings are needed to meet that standard of proof.”
It is expected that the process of going through all of the documents and interview witnesses will take several months at the least.