Trump’s Fight to Shield Finances Faces Skepticism in Court

(Bloomberg) -- Donald Trump’s lawyer asked three federal judges on Friday to keep Congress’s hands off the president’s financial records -- and got a skeptical response from the panel’s two Democratic appointees.

The president wants the U.S. Circuit Court of Appeals in Washington to overturn a trial judge’s May decision allowing the House Oversight and Reform Committee to demand information from his accountants, Mazars USA LLP, dating back to 2011.

“Congress has to have a legislative purpose that’s constitutional,” William Consovoy told judges David Tatel, Patricia Millett and Neomi Rao. Instead, Consovoy said, “they want to investigate the president. They want to see if something illegal was done.”

Consovoy argued that the committee’s subpoena couldn’t be valid unless Congress needed the information for legislative purposes. Tatel, appointed by President Bill Clinton, challenged him.

“What’s the principle to apply to say this is just a ruse?” the judge asked.

Later in the hearing, House attorney Douglas Letter told Rao, “This president has done something that’s never been done before” by maintaining his global business holdings while in office. “He put himself in this position.”

The President vs. Congress

The House’s oversight committee says it needs the records to explore possible conflicts of interest in the executive branch, potential violations of the Constitution’s emoluments clauses and other matters.

Not only does the committee’s demand lack a legitimate legislative purpose, Trump’s lawyers argue, but the subpoena amounts to an exercise of law-enforcement power the chamber doesn’t have. U.S. District Judge Amit Mehta in May rejected the president’s arguments. Mazars has taken no position in the dispute.

The case is one of three testing the power of Congress to elicit a sitting president’s financial records in the name of oversight. The outcome could have a wide-ranging impact on the relationship between the executive and legislative branches.

“We are talking about rulings that could have significant constitutional implications going forward for the balance of powers,” George Washington University historian Matt Dallek said in an interview. “The larger question,” he said, is do the rulings reduce Congress to “a second-rate branch?”

9/11

At the hearing, which drew some 200 onlookers and ran for more than two hours, Letter noted that Congress had conducted extensive hearings on the September 2001 terrorist attacks on the U.S., even as the government conducted its own criminal investigation. He called the president’s position on the chamber’s powers “ludicrous.”

Millett, who was appointed by President Barack Obama, asked Consovoy whether there was anything Congress could do about a president’s potential conflicts of interest. Consovoy said there wasn’t.

Rao, who was appointed by Trump, directed most of her questions to Letter, asking what evidence he had to show the Oversight Committee was authorized to investigate the president.

Letter said the House had delegated investigative powers to the committee. In this case, he said, that included its ability to examine the origins of the government lease allowing Trump to develop a hotel at the historic site of the former main post office in Washington, and whether he’s receiving financial benefits from foreign governments while in office, potentially violating one of the U.S. Constitution’s emoluments clauses.

Trump’s Hotel

Later, when Rao pressed Letter to connect the information the committee sought to its legislative objectives, he said the House needed to know whether Trump regarded the Washington hotel as his asset and “what is going on” there.

A New York-based federal appeals court next month will hear a similar case -- Trump’s appeal of a ruling giving the House Financial Services Committee permission to examine records held by Deutsche Bank AG and Capital One Financial Corp.

Another Democrat-controlled House committee, Ways and Means, filed a lawsuit on July 2 asking a Washington federal court to force the Treasury Department and Internal Revenue Service to hand over the president’s tax returns for the past six years.

The cases are Trump v. Mazars USA LLP, 19-5142, U.S. Court of Appeals, District of Columbia Circuit (Washington) and Trump v. Deutsche Bank AG, 19-1540, U.S. Court of Appeals, Second Circuit (Manhattan).

To contact the reporters on this story: Andrew Harris in Washington at aharris16@bloomberg.net;Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Jeffrey

©2019 Bloomberg L.P.