Thread by @renato_mariotti

THREAD: What should we make of the news that Trump reported different rent and occupancy figures for his buildings to tax authorities and lenders? Is it fraud?

1/ Today @propublica pushed a report that looked at New York tax documents for Trump properties that it obtained via FOIA and compared them to public lending documents for those same properties. They found serious discrepancies between the figures. Link: propublica.org/article/trump-…

@propublica 2/ One quote: "For instance, Trump told the lender that he took in twice as much rent from one building as he reported to tax authorities during the same year, 2017. He also gave conflicting occupancy figures for one of his signature skyscrapers, located at 40 Wall Street."

@propublica 3/ This is very important because the core of bank fraud is making a false statement to a bank. Similarly, making false statements on tax returns is also the core of most criminal tax cases.

If the statements to either the bank or the tax authorities are false, that's a problem.

@propublica 4/ As the article notes, however, the mere fact that there are discrepancies does not prove that they are false. There can be reasons why the figures could differ.

@propublica had experts look at the forms, and they concluded that the discrepancies could not be explained.

@propublica 5/ The accuracy of their analysis would be very important to any prosecutor considering potential tax or bank fraud charges. Presumably the defendant (would have some explanation of the discrepancy. Prosecutors would need to prove that explanation was bogus.

@propublica 6/ So what else would be needed to charge someone with bank fraud? If the statement to the bank is false, it would almost certainly be "material," which is a legal requirement that it be a false statement about something that would matter to the bank.

@propublica 7/ The other requirements are that the defendant made the statement "knowingly" and with the "intent to defraud." I've tried large, complex bank fraud cases, and those elements are always the hardest to prove.

False statements are the base of a bank fraud case but you need more.

@propublica 8/ If the bank records in question were submitted on behalf of a company, prosecutors would need to find and charge a human being who knew that the figures were false and that the person intended to defraud the bank for purposes of getting money (e.g. a loan) from the bank.

@propublica 9/ That can be harder to prove than you think. People at a company will point fingers at each other and claim that they had a faulty memory. In their life experience, jurors don't read everything they sign and find tax and bank records confusing.

@propublica 10/ Prosecutors really like "smoking gun" emails and documents that show an intent to defraud.

Is it possible to prove intent to defraud without a smoking gun? Sure, and I've convicted defendants (including wealthy real estate magnates) of fraud without them. But it's hard.

@propublica 11/ In the absence of a smoking gun, what is needed is a sheer volume of evidence that convinces jurors that there is a pattern of activity, not a one-time screw up on a form. It is also helpful for someone on the inside to testify that the activity was wrongful.

@propublica 12/ I should note that there are some criminal statutes that do not require proof of an intent to defraud. For example, 18 U.S.C. 1014 makes it a felony to make a false statement to a bank in order to secure a loan. But "knowledge" is still required. law.cornell.edu/uscode/text/18…

@propublica 13/ As for tax charges, it won't surprise you to learn that making false statements on your tax returns is also strong evidence of a crime. But the burden is greater. Typically prosecutors must prove that the defendant acted "willfully."

@propublica 14/ Because tax forms are so complicated, it's a defense to a criminal tax violation that you thought you acted lawfully. Prosecutors have to prove you didn't believe you were acting lawfully in good faith.

Usually corporations have accountants and lawyers who make that hard.

@propublica 15/ Jurors tend to believe that tax forms are filled out by specialists and are not completely understood by the people who signed them. So if a tax professional is involved, prosecutors need their testimony to be consistent with the theory that the tax return was fraudulent.

@propublica 16/ The bottom line is that today's reports by @propublica are troubling and merit an investigation by authorities. It's worth noting the Manhattan DA is investigating Trump's taxes and Trump's lawyers are fighting in court to prevent his attempt to obtain Trump's tax returns.

@propublica 17/ (It is unclear whether the Manhattan DA investigation encompasses these specific discrepancies, but it should be expanded to do so if it does not.)

There is also an open New York Attorney General investigation into the Trump Organization, and we don't know its scope.

@propublica 18/ But if lawyers or "legal experts" tell you that these discrepancies in and of themselves prove bank fraud or tax charges, they are misleading you.

They are troubling and merit investigation, but significantly more is needed. /end