Garrett Graff provided an excellent summary in Wired of the 17 Trump-related investigations currently open. A number of those investigative threads could ultimately combine into one federal racketeering investigation that could cast his business and charitable entities as elements of a criminal organization that Donald Trump oversaw as kingpin.
As Trump ascended to the presidency, more and more allegations surfaced suggesting that the Trump family businesses have been permeated with fraud. Central to the alleged fraud schemes attributed to the Trump family businesses over the decades is the use of shell companies, fraudulent misrepresentations, and false invoice schemes. If these alleged activities constituted mail, wire, bank, or tax frauds, they could make up a “pattern of racketeering activity” for purposes of the Racketeer Influenced and Corrupt Organizations statute. Allegations leveled against the Trump Organization, the Trump Foundation, Trump University, and their insiders suggest that such practices were designed to enrich, elect, and insulate Trump, who has already been described in Michael Cohen’s criminal docket as “Individual-1.”
At present, Justice Department policy and constitutional views would bar criminal prosecution of a sitting president. But, provided there is evidence of crime, there is no constitutional or policy impediment to prosecution of Trump-related entities or other insiders, including Trump family members. Further, a racketeering prosecution could trigger the powerful asset forfeiture provisions of RICO against the Trump Organization and any other Trump assets used in connection with crimes.
A successful RICO prosecution against the Trump Organization would represent an existential threat to the many assets, properties, licensing agreements, and multiple income streams that have made Trump a very wealthy man, to the extent those assets represent the fruit of any racketeering crimes engaged in by the family business.
A RICO conviction under 18 U.S.C. § 1961 hinges on proof that the underlying offenses demonstrate a “pattern of racketeering activity.” The statute delineates several hundred or so predicate acts that can contribute to a pattern of racketeering activity. Conduct may be charged under RICO as part of a pattern of racketeering activity even when the defendant has previously been convicted and sentenced for that conduct. As such, prior criminal convictions and civil suits relative to individual predicate acts do not inure against a RICO prosecution. This is key.
Further, RICO allows for a pattern of activity to encompass up to 10 years with regard to the underlying predicate counts as long as the last one falls within the statute of limitations. For example, should a federal prosecutor seek to charge mail or wire fraud counts against the Trump Organization in 2017, then the prosecutor could go back as far as 2007 to capture the full scope of the pattern of activity. This is also crucial.
The RICO statute allows for asset forfeiture actions to be initiated early in order to prevent criminal assets from being transferred beyond law enforcement’s reach. The government can take various legal actions to freeze assets upon indictment while the criminal prosecution unfolds.
A successful RICO prosecution requires the prosecutor to prove at least two racketeering activities that amount to a pattern of illegal activity. It is conceivable that the Trump Organization has engaged in multiple rackets over the prior 10 years. But for the purposes of this article, it’s worth looking at publicly available information about two fairly well-known causes célèbre: Trump Foundation and Trump University. I confine my analysis to two predicate offenses under RICO: mail and wire fraud.
Mail and wire fraud covers an incredibly broad range of conduct. Simply stated, one commits such fraud by engaging in any fraudulent scheme to intentionally deprive another of property or honest services by mail or wire communication. In Durland v. United States, the Supreme Court held that mail and wire fraud statutes encompass “everything designed to defraud by representations as to the past or present, or suggestions and promises as to the future.” Lower courts have progressively expanded this ruling. As such, they are also two of the most common RICO predicate offenses used by prosecutors.
In the 1960s and 1970s, Chief Postal Inspector Martin McGee, also known as “the top sleuth” or “Mr. Mail Fraud,” led his department in “exposing and prosecuting numerous mail fraud swindlers, e.g., land sales, phony advertising practices, insurance ripoffs, and fraudulent charitable organizations using the mail” (emphasis added), according to former postal inspector Shu Shin Luh.
Last year, then–New York state Attorney General Barbara Underwood exposed fraudulent practices at the Trump Foundation. This petition to the court carefully documented a pattern of illegal activity carried out by the Trump Foundation at the direction of its president, Donald J. Trump. It noted:
In sum, the Investigation revealed that the Foundation was little more than a checkbook for payments to not-for-profits from Mr. Trump or the Trump Organization. This resulted in multiple violations of state and federal law because payments were made using Foundation money regardless of the purpose of the payment. Mr. Trump used charitable assets to pay off the legal obligations of entities he controlled, to promote Trump hotels, to purchase personal items, and to support his presidential election campaign.
Such a pattern of multiple violations—especially one dating back to 2007 and extending to 2016—could easily form the basis of multiple racketeering predicate offenses in the form of mail and wire fraud. But it is important to note how Underwood’s petition drills down to the core of the racketeering mechanism in the factual background:
The Attorney General’s Investigation found that the Foundation is little more than an empty shell that functions with no oversight by its board of directors. The Foundation, which does not have any employees, delegated its operations to the accounting office of the Trump Corporation, Inc., a management company owned by Mr. Trump and located at 725 Fifth Avenue. The Trump Corporation supplies back office services to the several hundred Trump business entities that make up the Trump Organization. (emphasis added)
Further, Underwood notes in paragraph 27 that the “accounting staff for the Trump Organization had responsibility for issuing checks from the Foundation, and issued the checks based solely on Mr. Trump’s approval before presenting the checks to Mr. Trump for signature.”
She presented evidence that veterans’ charitable contributions to the foundation, solicited during a televised Iowa fundraiser, were used for political campaign purposes. The disbursements allegedly made in the name of the Trump Foundation were in actuality self-dealing. Such patterns of Trump-related misrepresentations could form the basis of wire fraud claims, each one representing a potential RICO predicate act.
Underwood referred the evidence referenced in her petition to the Internal Revenue Service and Federal Election Commission, while providing a carbon copy to DOJ’s Public Integrity Section. Public Integrity could theoretically collaborate with the Southern District of New York hush money investigation—related to allegations of false invoices and accounting fraud—to investigate racketeering with the added information in the New York attorney general’s findings. Of course, one would have to presume the U.S. attorney general’s office would allow line prosecutors to follow the facts without politically motivated interference—hardly a sure bet in this environment.
Trump University (aka the Trump Wealth Institute and Trump Entrepreneur Initiative LLC) could also be a prime candidate for a RICO investigation. It was an American for-profit education company owned and operated by the Trump Organization that ran a real estate training program from 2005 to 2010. Former New York Attorney General Eric Schneiderman, whom Underwood succeeded, described Trump University as a bait-and-switch scheme and pointed to the fact that the organization was not a university. He accused Donald Trump of misleading more than 5,000 people via false advertisement into paying up to $35,000 apiece to learn his real estate investment techniques. Each mailing or electronic solicitation carrying a material false statement could be a separate count of fraud for purposes of RICO’s pattern of racketeering activity.
On Nov. 18, 2016, Donald Trump agreed to pay approximately $25 million to settle two class-action suits and Schneiderman’s suit while not admitting to any wrongdoing. But a pattern of illegal activity evidenced by 5,000 people being defrauded by the same scheme can be prosecuted as racketeering activity notwithstanding the civil settlement.
Trump-related investigations appear to be suitable for consolidation into one RICO investigation that could ultimately seize Trump assets and cast the president as the kingpin at the head of a criminal organization.