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Expansion of Trump Org probe signals a focus on intent, experts say

New York Attorney General Letitia James speaks during

New York Attorney General Letitia James speaks during a candlelight vigil in honor of National Crime Victims' Rights Week on Monday, April 19, 2021 in Mineola. Credit: Howard Schnapp

ALBANY — The expansion of a probe into the Trump Organization’s finances signals the state attorney general is examining the issue of "willfulness" and intent which could result in criminal charges, experts said Wednesday.

Attorney General Letitia James’ office confirmed it now is conducting a criminal investigation into ex-President Donald Trump’s business empire, expanding what had previously been a civil probe into manipulation of property values for tax and loan benefits. The distinction is important. A civil case can result in fines and lawsuits; a criminal case, charges.

James is working alongside Manhattan District Attorney Cyrus Vance Jr., who has been investigating Trump for two years not only on valuations but also potential bank and tax fraud. Recently, Vance won a court order to obtain eight years’ worth of the former president’s tax returns. Trump denounced the probe as a fishing expedition and "investigation that is in desperate search of a crime."

But experts said the shift means James is looking at "willfulness" — a person or entity’s intent — which is crucial in determining criminality.

"Willfulness — that’s the key factor" that elevates a case, said David Shapiro, coordinator of the fraud examination and financial forensics program at John Jay College of Criminal Justice.

"That's what elevates the ordinary level of tax avoidance to tax evasion. From ‘Whoops, I didn’t know that wasn’t deductible’ to tax fraud," he said. "The difference between a falsehood and a lie, if you will."

Gregory Germain, a Syracuse University Law School professor, said James’ notification indicates "they think it’s worse than they first thought."

"They saw something in the tax returns or some of the other information they have that indicates there is really serious conduct here," said Germain, who teaches business law, taxes, contracts and bankruptcy. "They think there is evidence of criminal activity, so they are upping the ante."

James’ office has been examining whether the Trump Organization manipulated property values to gain illegal financial benefits: Inflating values to obtain better loan rates only to lower the values of the same properties to reduce taxes.

Her office notified the company its investigation is no longer only civil in nature.

"We have informed the Trump Organization that our investigation into the organization is no longer purely civil in nature. We are now actively investigating the Trump Organization in a criminal capacity," said Fabien Levy, a James’ spokesman, in an email.

Trump criticized James, calling the probe politically motivated.

"There is nothing more corrupt than an investigation that is in desperate search of a crime. But, make no mistake, that is exactly what is happening here," the former president said in a statement posted online.

"The Attorney General of New York literally campaigned on prosecuting Donald Trump even before she knew anything about me. She said that if elected, she would use her office to look into ‘every aspect’ of my real estate dealings," Trump continued. "The Attorney General made each of these statements, not after having had an opportunity to actually look at the facts, but BEFORE she was even elected, BEFORE she had seen even a shred of evidence."

James’ notification doesn’t necessarily mean she’ll levy criminal charges — it could even mean she’s "punting" on the civil case, Shapiro said. Or it could mean James’ office believes criminality is involved and she is "doubling down" with Vance’s office in a broader probe.

Criminal charges in these types of cases typically involve abuse of nonprofit status, tax fraud, fraudulent loans and fraudulent real estate taxes, Shapiro said.

"What they have and how strong it is, we don’t know," Germain said. "But I don’t think they would have done it unless they think they have strong evidence of criminal activity. Or what they think is evidence of criminal activity. We don’t know till the other side gets to present its case. But this could turn into very serious charges."

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