- This week, New York's attorney general gave notice that she is ready for Trump's October 2 fraud trial.
- Buried in the notice was a threat: She may seek new penalties against Trump and the Trump Organization for the "spoliation" of evidence.
At Mar-a-Lago, it's the documents he kept that got Donald Trump in trouble.
But in New York, the former president now faces the risk of new penalties for documents he allegedly failed to keep.
Buried in a "ready for trial" notice filed this week by New York Attorney General Letitia James is a warning: She may ask the judge in Trump's October 2 fraud trial to punish the former president for the "spoliation of evidence."
As defined under New York case law, "spoliation" is the intentional failure to preserve documents or other evidence for pending or reasonably foreseeable litigation.
Potential penalties for spoliation include fines and a contempt-of-court ruling. But a finding of spoliation can lead to still more serious consequences. It would allow a judge to hold any missing documents against the party that failed to turn them over.
The dreaded 'adverse inference' penalty
It's the dreaded "adverse inference" penalty, something Trump would not want to suffer in this high-stakes trial, as he fights a $250 million civil fraud lawsuit that seeks to run his company out of New York at great personal and financial cost.
If spoliation is proven, New York Supreme Court Justice Arthur Engoron could infer, in reaching his verdict, that any evidence the defendants kept from the attorney general would have been harmful to the defense.
"This would absolutely tip the scales in favor of the government," former New York Assistant Attorney General Kenneth Foard McCallion said of the potential impact of James proving Trump or his co-defendants withheld evidence.
"It would allow an inference of guilt" and allow the judge to interpret the missing documents in the worst possible light, said McCallion, who heads McCallion & Associates and is the author of "Profiles in Cowardice in the Trump Era."
"Nobody goes about destroying evidence that's in their favor."
James' lawyers may also ask Engoron to draw a similar "adverse inference" from the more than 400 times that Trump pleaded the Fifth at a deposition a year ago, and the more than 500 times that his co-defendants in the lawsuit, son Eric Trump and ex-CFO Allen Weisselberg, also pleaded the Fifth.
A spokeswoman for the attorney general has said that Trump was more forthcoming while answering questions this past April, during an eight-hour deposition do-over in James' office.
"Discovery is complete. However..."
"Discovery in this matter is complete," Kevin C. Wallace, a lead attorney for James' lawsuit, told the judge in this week's ready-for-trial notice, indicating that each side has now received the entirety of the other side's trial evidence.
"However," Wallace continued, "OAG reserves its right to seek relief after trial relating to the Defendants' spoliation of evidence." "OAG" is short for Office of the Attorney General.
What relief might be sought, for what missing documents, and against which of the trial's defendants, is not specified in the notice.
But over the past two years, Trump is the one defendant in the lawsuit who has been singled out repeatedly by the attorney general's lawyers and by Engoron for failing to comply with subpoenas for his personal business documents.
In November, Engoron ordered an independent monitor to watch over the Trump Organization after the attorney general's office successfully argued that the company continues to engage in fraud.
Documents? What documents?
Out of some 900,000 documents that the Trump Organization has turned over to James in response to her subpoenas, only ten have come from Trump's personal files, despite the fact that he ran the multi-billion-dollar real-estate and golf-resort business.
"In some instances, it's been pulling teeth to get documents," Wallace complained during a hearing in April of last year.
In fighting any spoliation accusation, Trump may argue, as his lawyers did back then, that he simply had no documents to turn over.
But last time Trump tried that argument, Engoron still hit him with $110,000 in fines and a contempt-of-court finding.
The contempt order was lifted two months later, after prosecutors received affidavits from Trump and other key Trump Org executives swearing that his personal business documents had been thoroughly searched for in all their possible storage locations, but simply didn't exist.
These so-called "Jackson affidavits" could come back to bite Trump in a spoliation battle, as admissions that sought-after documents were not mislaid — they're gone.
Trump's "Stickies" situation
As CEO of a multi-billion-dollar real-estate company, Trump should have had many, many more than just ten personal business documents to turn over, the attorney general's lawyers have argued. After all, Trump's own top corporate lawyer, Alan Garten, said so himself.
Two summers ago, Garten testified in response to an AG subpoena that Trump "regularly generates handwritten documents," James' office said in a 2022 filing.
He told the AG's office that his boss, who famously shuns computers, emails and texts, routinely used Post-it Notes and that notorious black Sharpie to mark up appraisal drafts and other key documents.
Garten "testified that there were file cabinets at the Trump Organization containing Mr. Trump's files, that Mr. Trump had assistants who maintained the files on his behalf, that he received and maintained hard copy documents, and that he used Post-it Notes to communicate with employees."
These documents would then be stored in Trump's "chron," or chronological, files, which were kept in dozens of file cabinets in Trump Tower on Manhattan's Fifth Avenue, Trump's top corporate lawyer testified, according to court filings.
None of these sticky notes, and nothing approaching the contents of multiple file cabinets, was ever turned over to the AG's office in response to their subpoenas for Trump's personal business records, James' lawyers complained last year.
"Spoliation" would be no slam-dunk to prove
Proving intentional spoliation and triggering that painful "adverse inference" penalty would require clearing a high legal bar for James' lawyers, who would bear the burden of proof.
Sanctions are only warranted if the party responsible for failing to turn over evidence knowingly destroyed or hid that evidence, according to New York case law. Mere negligence — as in, "whoops, Trump is really bad at keeping records" — is not enough.
The attorney general would have to convince Engoron that some time after the summer of 2021, when Garten described all those file cabinets, the cabinets' Sharpie-scrawled, sticky-note-bedecked contents were willfully hidden or destroyed.
Possible defenses include Trump blaming any missing evidence on his company's haphazard document-retention habits.
The Trump Organization actually had no set document-retention policy, his longtime executive assistant, Rhona Graff, told the attorney general's office in a deposition last year.
But if Trump tries to claim, as he did in his own Jackson affidavit last year, that his assistants handled all of his filing, then Graff's testimony might contradict him. Typically, she didn't even read Trump's documents, let alone file them, the AG's lawyers say she told them.
"I didn't think it was my position to look inside," Graff testified of the manila folders of business documents that crossed the former president's Trump Tower desk all day long, in the years before he left for Washington.
A "bunch of issues"
High burden of proof aside, this week's filing shows that James' lawyers are not letting the missing-documents matter go.
"I'll be frank," Wallace had told the judge more than a year ago, during the same April, 2022 hearing where he likened getting documents from Trump to "pulling teeth."
Trump lawyer Alina Habba had just said for the umpteenth time that Trump had nothing more to turn over, when Wallace's tone turned ominous.
"If that's all there is," he told the judge, "it raises a bunch of other issues."
A spokesperson for James and a lawyer for Trump declined to comment on any potential spoliation battle.
At stake for Trump in two months
James' 200-page lawsuit, filed in September of last year, alleges that Trump and top executives, including his two eldest sons, routinely overstated or understated the value of company assets.
These valuations were off by billions of dollars, cumulatively, over a decade. Trump or his sons signed off on this phony math in financial documents used to secure hundreds of millions in loans and tax breaks, James alleges.
Ivanka Trump was originally a defendant, but was removed from the case in June, after a state appellate court found that James' claims against her were too old.
At the October trial, lawyers will ask Engoron to impose a $250 million penalty and to let James drive the company out of New York by permanently revoking its corporate charter.
If the relief sought by the lawsuit is granted, Trump and his two eldest sons would also be barred from ever running a business in the state again. And they would be barred for five years from buying property in the state or borrowing from a New York-registered bank.
Trump and his co-defendants in the civil case have denied any fraud, instead insisting that the valuation of property is complicated and subjective. Banks were happy to lend him money over the years, and they made a lot of money doing so, the former president has also argued.
Trump's lawyers have said repeatedly that their client is looking forward to educating James' office at trial on the extraordinary success of his multi-billion-dollar company.