Trump indictment highlights challenges of prosecuting white-collar crime

April 5, 2023


Former President Donald Trump’s indictment on 34 charges of falsifying business records concerns behavior beginning in 2015, when then-candidate Trump took efforts to secretly keep negative stories about his past out of the national press.

Most well known, Trump’s former lawyer, Michael Cohen, pleaded guilty in 2018 to his role in paying $130,000 in “hush money” to retired porn star Stephanie Clifford (aka Stormy Daniels) in order to keep secret her earlier affair with Trump.

Will Thomas
Will Thomas

“This is an unusual criminal case, to say the least,” said Will Thomas, assistant professor of business law at the University of Michigan’s Ross School of Business. “It marks the first time in history that a U.S. president has been charged with a crime. But while there will be many fraught political and constitutional dimensions to these proceedings, at its core this prosecution represents a straightforward case of white-collar crime.”

Thomas discusses the charges brought against Trump and what a conviction would mean for his businesses and presidential campaign.

Will Trump be convicted? How strong is the case?

In order to convict Trump, prosecutors will have to overcome two major obstacles. First, there’s the challenge that bedevils virtually all white-collar cases: proving intent. Proving a defendant’s mental state is often the hardest part of any white-collar investigation. There’s nothing inherently illegal about agreeing to keep information secret, nor is there necessarily anything wrong with paying someone for doing so. Intent, what the criminal law calls “mens rea,” is what distinguishes acceptable business practices, like nondisclosure agreements and trades secret policies, from crimes like bribery, blackmail and obstruction of justice.

In this case, prosecutors will need to show Trump not only intended to defraud state officials by keeping the payments secret, but that he specifically intended to conceal his commission of a second, separate crime. On the one hand, convincing a jury of that level of specificity in a defendant’s mental states can be hard—and it can be especially difficult when the defendant does not communicate via text or email and has a reputation for destroying records. On the other hand, quantity has a quality of its own: By bringing so many charges all related to the same underlying event, the prosecutors are clearly trying to signal that Trump knew what he was doing and specifically intended to keep his affair secret.

Could more charges be coming from New York?

Absolutely. Although the indictment focuses on hush payments related to the 2016 election, a separate civil lawsuit initiated last year by New York Attorney General Letitia James alleges that the Trump Organization, and Trump personally, routinely provided false statements of financial conditions to banks, tax authorities and other third parties.

Although the district attorney’s new criminal charges are independent from the attorney general’s civil charges, it remains possible that prosecutors will decide to refile an indictment to include criminal charges against Trump for his role in allegedly falsifying these business records. And because issuing a false financial statement is unquestionably a crime under New York state law, adding these charges would provide prosecutors a clear path for some of the obstacles mentioned above.

What would a conviction mean for Trump’s businesses?

Conviction could mean serious personal consequences for Trump. Falsifying business records carries the possibility of up to four years’ imprisonment—although, judging from past enforcement statistics, jail time would be an unlikely outcome.

Regardless of the punishment imposed, Trump’s business interests would likely suffer more than they already have if he is convicted. I and others have written extensively about the range of collateral consequences that come with a conviction. There are literally thousands of regulatory restrictions that apply to anyone convicted of a crime. While many of these consequences won’t matter to Trump’s daily life, some would have real consequences. In particular, federal securities laws prohibit doing business with “bad actors,” which includes anyone convicted of a state crime, and would severely limit Trump’s ability to raise capital in the future.

These kinds of restrictions would likely further impair Trump’s businesses, which have already experienced serious legal setbacks since he left office. The state of New York recently convicted the Trump Organization for tax fraud. The Trump Organization, along with Trump himself and several of his family members, are facing a civil lawsuit from New York Attorney General Letitia James, which could result in all of them being barred from doing business in the state. And the SEC is investigating his social media company, Truth Social. On the other hand, much of Trump’s business these days seems to be connected to his golf courses, and with them lucrative agreements with the Saudi-owned LIV Golf tour. It seems unlikely that anything will dislodge these relationships, which were forged in the aftermath of Trump’s 2016 election.

What would a conviction mean for Trump’s presidential campaign?

The Constitution establishes eligibility requirements for becoming president, and nothing there forbids a convicted felon from holding office. Florida’s Constitution, on the other hand, disenfranchises felons from voting and holding state office, so as a resident Trump probably wouldn’t be able to vote for himself in the upcoming election.

That said, it is likely that Trump’s campaign for the presidency would face new challenges if he were convicted. For the same reasons that a felony conviction complicates fundraising in the private sector, Trump’s campaign might face fundraising challenges during the election. Indeed, many states have their own rules around campaign finance, ballot access and a host of election-related issues. So while the Constitution does not prohibit a convicted felon from holding office, the Trump campaign would likely have to commit significant financial and legal resources to challenging a host of these issues down the stretch.

And what happens if Trump is convicted and he wins the 2024 presidential election? Well, then we start getting into weird hypotheticals. For example, a felony conviction precludes someone being enlisted in the U.S. military. Does that rule apply to the Commander in Chief? Probably not. If Trump were sentenced to a term of imprisonment, could the state of New York lawfully hold the duly elected president in prison? Maybe? The list of unsettled legal issues here is long—for now, all we can do is focus on the case at hand.

How does this indictment impact other investigations that Trump is facing?

Trump and his business have faced an array of legal challenges since he left office. As a legal matter, these issues are independent of each other. So, his being convicted in New York wouldn’t necessarily change whether he might be charged by Georgia officials for election interference or by federal prosecutors for keeping state secrets.

Practically, however, there are two immediate consequences from Trump’s indictment. First, it probably slows down the separate, civil lawsuit coming out of the New York Attorney General’s office. The state attorney general and the Manhattan district attorney are different offices with different jurisdictions, and the attorney general has already said that her case will not be slowed down by this new indictment. But that decision won’t entirely be up to her office; there is always the chance that a judge would delay or pause proceedings to let the criminal case go forward. Meanwhile, the criminal law represents a pride of place among enforcement mechanisms, and there is a norm or custom of resolving criminal charges before civil suits. Ironically, this might be better for Trump’s businesses because the consequences of losing his civil suit would likely be far worse than losing a criminal case.

Most importantly, this week’s indictment makes the next indictment much more likely. It is hard to break a two-century-long tradition of not prosecuting former presidents. But once that tradition is broken, it’s a lot easier to file a second indictment.