A long-standing criminal investigation into Donald J. Trump and his family business reaches a critical juncture as Cyrus R. Vance Jr., the prosecutor overseeing the investigation, enters his final weeks as Manhattan District Attorney.
Prosecutors for Mr. Vance have issued new subpoenas for cases involving Mr. Trump’s hotels, golf clubs and office buildings. They recently interviewed a banker employed by Deutsche Bank, Mr. Trump’s main lender. And earlier this month, they told a highly-scrutinized senior Trump executive, Matthew Calamari, that they did not currently intend to indict him in the framework. of the alleged tax evasion scheme that led to charges against Mr. Trump’s company and its CFO. .
The developments, described by people familiar with the matter, show that Manhattan prosecutors have moved away from investigating these tax matters and have returned to the original focus of their three-year investigation: Mr. Trump’s statements about the value of its assets.
In particular, the people said, prosecutors are looking to determine whether Mr. Trump or his company inflated the value of some of his properties while trying to secure financing from potential lenders. If Mr. Vance’s office concludes that Mr. Trump intentionally submitted bogus securities to potential lenders, prosecutors could argue that he engaged in a fraud scheme.
Mr. Trump and his company have denied any wrongdoing, calling the investigation a politically motivated witch-hunt led by Mr. Vance, a Democrat. His attorneys work with the office of New York State Attorney General Letitia James, also a Democrat, gubernatorial candidate and outspoken critic of Mr. Trump.
The probe is taking place as Mr. Trump continues to wield tremendous influence over the Republican Party and flirts with another presidential race in 2024. It has yet to hamper his political stance and may even energize his base, though the survey can also serve as an expensive distraction.
It is not clear whether new charges will be laid, but if they are, it could be difficult to prove that Mr. Trump or his company defrauded their lenders. One of the challenges is that the lenders are sophisticated financial institutions that have most likely done their own valuation of Mr. Trump’s properties without fully relying on him.
Still, prosecutors for Mr. Vance have issued a series of subpoenas in recent months.
At least one subpoena issued this summer to Mr. Trump’s company, the Trump Organization, has requested information on how the company is valuing various assets, according to the people, all of whom spoke on condition of anonymity because they were not allowed to discuss the matter.
The company resists the delivery of certain documents, a question which is the subject of a sealed litigation in Manhattan.
The Deutsche Bank employee, a banker in the division who works with Mr. Trump, also recently met with prosecutors in Mr. Vance’s office to answer questions, people said.
The bank has provided hundreds of millions of dollars in loans to Mr. Trump over the years, including for his hotels in Chicago and Washington and his Doral golf resort in Florida.
Last year, during a relatively early phase of the investigation, prosecutors questioned Deutsche Bank employees about the lender’s general procedures for making lending decisions.
This summer, prosecutors moved away from that focus on valuations when they indicted the Trump Organization and its longtime CFO Allen H. Weisselberg with unrelated tax crimes involving a scheme to pay for benefits luxury to some executives. .
Mr Vance’s office has also weighed in for months whether to charge Mr Calamari, Mr Trump’s former bodyguard who is now the organization’s director of operations, for failing to pay taxes on the same type of benefits.
But this month, after prosecutors returned to the larger investigation, they told Calamari they had “no current intention” to press charges, his lawyer said.
“We believe this is the fair and equitable decision,” said attorney Nicholas Gravante Jr., who had argued that Mr. Calamari was not involved in the finances of the company and was relying on another Trump employee to prepare his taxes. “What the future holds for us in terms of further investigation by the public prosecutor is an enigma.”
Mr Vance, who has not sought re-election for a fourth term this year, initially said he wanted to decide whether to indict Mr Trump before he left.
But he is running out of time.
He is stepping down at the end of this year, and prosecutors could take months to present a complex financial case like this to a grand jury if they decide charges are warranted.
And so, after more than three years of investigating Mr. Trump in spurts, Mr. Vance may have to hand the climax of the case over to his successor, Alvin Bragg.
In his first few weeks in office, Bragg would face a monumental decision: whether to file a lawsuit against a former US president.
Mr Bragg, a former federal prosecutor who will be the first black person to hold the post, has campaigned in part over his aggressive record against Mr Trump, frequently mentioning the many times he has sued the Trump administration while he served in the state. attorney general’s office.
Since winning the Democratic primary in June, Mr. Bragg has been more reserved. A spokesman for Mr Bragg, Richie Fife, said he intended to retain the team working on the Trump investigation, including two senior officials overseeing it, Mark F. Pomerantz and Carey Dunne, Mr. Vance’s Advocate General who was deeply involved in the case.
Mr Bragg has not yet been briefed on the details of the investigation, Mr Fife said. He takes office on January 1.
Mr. Vance is one of three district attorneys investigating Mr. Trump or his company. Mr. Trump’s attempts to overturn Georgia election results last year are under criminal investigation in Atlanta. And the district attorney for the Westchester County suburb outside New York City has started reviewing financial transactions at a golf club Mr. Trump owns there.
Westchester’s investigation focused in part on whether the Trump Organization, while seeking to lower that club’s tax bill, falsely undervalued the property. The company has denied any wrongdoing and other golf course operators say it’s common in the industry to come up with low numbers when calling property taxes.
At one point, Mr. Vance’s office also looked at the company’s relationship with New York City property tax authorities, but its attorneys appear to have strayed far from that effort.
Instead, they are now focusing on the company’s statements to lenders and have also looked at some of its failed attempts to get financing, people said.
Lawyers for the Trump Organization will likely argue that property values are subjective and that Mr. Trump could not have fooled Deutsche Bank because the lender, knowing that Mr. Trump’s values were estimates and that he had the reputation of exaggerating its wealth, made its own analysis. of his net worth.
People familiar with the relationship said that after the bank came to believe that Mr. Trump was overvaluing some of his assets, it still decided to lend him money, concluding that he was a safe risk in left because he had more than enough money. and other assets to personally secure the debt.
The Trump Organization is expected to soon sell the hotel lease in Washington and repay the Deutsche Bank loan to this property.
Mr Vance’s investigation began in August 2018 with a focus on the company’s role in paying secret money to an adult film actress who said she had an affair with Mr Trump.
The investigation was first delayed for nearly a year at the behest of federal authorities, who had focused on similar behavior, and then by an 18-month battle in which Mr. Trump sought to prevent the district attorney to obtain his tax returns.
This bitter legal battle twice reached the Supreme Court of the United States before ending in victory for Mr. Vance’s office, which obtained millions of pages of Mr. Trump’s personal and corporate tax records and other financial documents..
Once prosecutors got the files, they focused on pressuring Mr Weisselberg to cooperate and turn against his longtime employer.
But Mr. Weisselberg pushed back prosecutors, a move that led to his indictment in July, along with the Trump Organization.
In laying the charges against Mr. Weisselberg and the company, prosecutors chose to do what amounted to a detour, temporarily diverting attention from the larger investigation to Mr. Trump and his family business.
That case focused on what prosecutors described as a 15-year program for the Trump Organization to pay its leaders for unofficial perks like free cars and apartments.
Prosecutors charged Mr Weisselberg with receiving a rent-free apartment, tuition at a private school for his grandchildren and renting Mercedes-Benz vehicles for himself and his wife.
He did not pay taxes on $ 1.7 million of those benefits, according to the indictment, which charged him with robbery, tax evasion and other charges.
Mr. Weisselberg’s attorneys, Mary E. Mulligan and Bryan C. Skarlatos, said Mr. Weisselberg will challenge the charges in court.