New York v. Trump

683 F.Supp.3d 334

The People of the State of NEW YORK, v. Donald TRUMP, Defendant.

23 Civ. 3773 (AKH)

United States District Court, S.D. New York

Signed July 19, 2023

Matthew Colangelo, Rebecca Grace Mangold, Catherine McCaw, Katherine Caldwell Ellis, Steven Chiajon Wu, Susan D. Hoffinger, Christopher Conroy, I, Philip Vyse Tisne, New York County District Attorney's Office, Investigation Division, New York, NY, for The People of the State of New York.

Todd Blanche, Blanche Law, New York, NY, Susan Rose Necheles, NechelesLaw LLP, New York, NY, for Defendant.

ORDER AND OPINION GRANTING MOTION TO REMAND

ALVIN K. HELLERSTEIN, United States District Judge:

Defendant, Donald Trump, previously President of the United States, removed this criminal case from the New York Supreme Court to the United States District Court for the Southern District of New York. The People of the State of New York (the "People") moved to remand. The question to be decided, and upon which I write, is whether the governing statute, 28 U.S.C. § 1442(a), authorizes such removal. Section 1442(a)(1) allows "officers . . . of the United States" to remove a civil or criminal case brought against them in a state court, if the case is "for or relating to any act [performed by or for them] under color of [their] office." The cases interpreting this statute, discussed later, require also that the officer raise a defense based on federal law.

The issues have been fully briefed. I heard arguments and conducted an evidentiary hearing on June 27, 2023. I hold that there is no subject matter jurisdiction, that § 1442(a) was improperly invoked, and that the case is remanded to the New York Supreme Court for further proceedings in that court.

BACKGROUND

I. Summary of the Indictment

On April 4, 2023, a grand jury in the Supreme Court of New York, New York County, charged Trump with thirty-four counts of Falsifying Business Records in the First Degree in violation of N.Y. Penal Law ("NYPL") § 175.10. The Indictment alleges that the crimes were committed between February and December 2017, and can be categorized into three types of falsifications of business records kept and maintained by the Trump organizations: eleven counts of false invoices; twelve counts of false ledger entries; and eleven counts of false checks and check stubs, of which nine were signed by Trump personally—all with intent both to defraud and to commit another crime, or aid or conceal the commission thereof.

II. Statement of Facts Filed by the People

The Indictment was made more specific in a Statement of Facts filed by the People. (Notice of Removal ("Notice"), Ex. E ("SOF").) The People allege that Trump, the beneficial owner of a number of businesses headquartered in New York County, became a candidate for election to become President of the United States in June 2015. In August 2015, Trump, Michael Cohen—a Trump Organization lawyer and Trump's Special Counsel—and the Chief Executive Officer of American Media, Inc. ("AMI"), met to devise a scheme to suppress negative stories about Trump. (Id. ¶¶ 5-7.)

In October 2016, at the direction of his Chief Executive Officer, the Editor-in-Chief of AMI alerted Cohen that Stephanie Clifford, an adult film actress known as Stormy Daniels, was seeking to publish an account of her sexual liaison with Trump during Trump's marriage. Cohen met with Clifford's lawyer and the two reached an agreement, with Trump's knowledge, to exchange Clifford's right to publish her account for $130,000. Trump did not want to make the payment himself. In discussions with Trump and the Trump Organization's Chief Financial Officer ("CFO"), Cohen agreed to advance the money and Trump agreed to reimburse him. Cohen opened a bank account in the name of Essential Consultants, LLC, a shell company that he controlled. On October 27, 2017, Cohen deposited $131,000 from a personal line of credit into the account and wired $130,000 to Clifford's lawyer. (Id. ¶¶ 17-21.)

In January 2017, Cohen and the Trump Organization CFO met to discuss how to reimburse Cohen. They agreed that Trump would pay Cohen $420,000: $180,000 to reflect reimbursement for Cohen's $130,000 payment to Clifford's attorney and an additional $50,000 expense, doubled to $360,000 to enable Cohen to treat the reimbursement as income rather than reimbursement of a hush money payment, and an additional $60,000 bonus. Trump, Cohen, and the CFO then agreed that payment was to be made in monthly installments of $35,000 beginning January 2017. Cohen was to send an invoice monthly to the Trump Organization for payment pursuant to a "retainer agreement." The retainer agreement did not exist. Trump and Cohen confirmed the payment agreement at a meeting in the White House in February 2017. (Id. ¶¶ 24-27.)

On February 14, 2017, Cohen emailed his first invoice to the Controller of the Trump Organization, requesting $35,000 for January and $35,000 for February 2017, "[p]ursuant to the retainer agreement." (Id. ¶ 28.) The CFO approved payment, and the Controller instructed the Accounts Payable Supervisor to "[p]ost to legal expenses. Put 'retainer for the months of January and February 2017' in the description." (Id.) The invoice was coded in the general ledger, and maintained in the Trump Organization's electronic accounting system, to reflect a payment for legal expenses. (Id. ¶¶ 30-31.)

Cohen, the CFO, and the Controller followed the same procedure for the ten following months, March to December 2017. For each payment, the Trump Organization's Accounts Payable Supervisor prepared a check and check stub notated as payment for legal services. The first two checks, for January and February 2017, were paid by the Donald J. Trump Revocable Trust and signed by two trustees.¹ (Id. ¶ 32.) Trump signed the next nine checks, drawn on his personal bank account. Trump then had the signed checks sent back to the Trump Organization in New York City. There, the checks, stubs, and invoices were scanned into the Trump Organization's books and records, and the checks then were mailed to Cohen. (Id. ¶ 33.)

In August 2018, Cohen pleaded guilty to campaign finance violations in connection with his $130,000 payment to Clifford. Cohen testified, in connection with his plea:

[O]n or about October of 2016, in coordination with, and at the direction of, the . . . candidate [for federal office], I arranged to make a payment to a second individual with information that would be harmful to the candidate and to the campaign to keep the individual from disclosing the information. To accomplish this, I used a company that was under my control to make a payment in the sum of $130,000. The monies I advanced through my company were later repaid to me by the candidate. I participated in this conduct, which on my part took place in Manhattan, for the principal purpose of influencing the election.

(Id. ¶ 44.)

III. Defendant's Notice of Removal

On May 4, 2023, Trump removed the case to the United States District Court on the basis of federal officer removal, 28 U.S.C. § 1442(a)(1). Trump alleges that the district court has subject matter jurisdiction because the Indictment "charges President Trump for conduct committed while he was President of the United States that was within the 'color of his office,' and the charges involve alleged federal and state election law violations that have a federal preemption defense." (Notice ¶ 2.) He claims that Cohen was hired as his personal attorney "as a direct result of [his] role as President of the United States and his obligations under the Constitution, and in order to separate his business affairs from his public duties." (Id. ¶ 28.) Trump claims also that the conduct for which he was charged "relat[es] to" acts performed under color of office because they relate to his position as President. (Id. ¶ 29.)

Trump alleges further that he has two federal defenses to the charged conduct. He states that "shortly before assuming the Office of the Presidency, and in order to assure the American public that he had separated his personal business from his public duties . . . as well as to fulfill various constitutional obligations, e.g., the Foreign Emoluments Clause, Art. I, sec. 9, cl. 8, and the Take Care Clause, Art. II, sec. 3,"² Trump placed his businesses in a trust and "hired a personal lawyer—Michael Cohen—to handle his personal affairs," and that "[t]hese steps were taken solely because he was President of the United States." (Id. ¶ 19.) Trump argues that since his "decision to retain Michael Cohen to act as his personal lawyer arose out of his duties as President," it "gives rise to a federal [immunity] defense . . . ." (Id. ¶ 20.) Furthermore, Trump argues that because the Indictment's felony charges are predicated on alleged violations of state and federal election laws, they are preempted by the Federal Election Campaign Act ("FECA"), 52 U.S.C. § 30143(a). (Notice ¶¶ 22-24.)

Finally, Trump asserts that the district court has "protective jurisdiction" because the indictment "is politically motivated and was brought because a local politician . . . disfavored President's Trump's acts and policies as President of the United States . . . ." (Id. ¶ 31.)

On May 30, 2023, the People filed a motion to remand to the New York Supreme Court. (ECF No. 17.)

IV. The Evidentiary Hearing

On June 27, 2023, I heard oral arguments and conducted an evidentiary hearing as required by 28 U.S.C. § 1455(b)(5). At the hearing, the People introduced an October 2016 agreement between Michael Cohen and Stephanie Clifford's attorney pursuant to which Cohen's shell company, Essential Consultants, LLC, would pay $130,000 for the rights to Clifford's account of her encounter with Trump (Colangelo Decl., May 30, 2023 ("Colangelo Decl."), Ex. 3), as well as an October 2016 bank statement showing Cohen's payment of $130,000 (Colangelo Decl., Ex. 8.) Handwritten notes on the bank statement show that amount was combined with other amounts to reach a total of...