The Trump Investigations Mount

W ith Donald Trump, a few things are certain. He can’t win a national election, and the sooner Republicans make peace with that remorseless fact, the better. Plus, as I pointed out yesterday in addressing Attorney General Merrick Garland’s appointment of a special counsel to handle Trump investigations, new investigations are apt to emerge and further cement his nonviability. Why? Well, for starters, he is naturally reckless. He has also lost a step — his decline is not as patent as that of his presidential successor, but it’s evident. Plus, he is no longer the beneficiary of daily, diligent support from John Kelly, Kellyanne Conway, Don McGahn, H. R. McMaster, John Bolton, Bill Barr, Mike Pompeo, Pat Cipollone, and the rest of an accomplished administration team whose members wore themselves out pushing against his self-destructive proclivities. Now, the proclivities run amok, with Trump sinking under their weight.

You want to tell yourself this is not his fault — at least, not completely? I’m sympathetic. The former president has done a great deal of damage to himself, to the Republican Party, and to the conservative movement’s capacity to stop, much less roll back, what Democrats are doing to the nation’s security and prosperity (although Trump’s elevation of constitutionalist conservatives to the federal bench remains a bulwark to be celebrated). But he has also been subjected to more investigative scrutiny — much of it politicized, though much he brought on himself — than any president or political Svengali in American history. Where he may have violated the law, I don’t blame his enemies for demanding an accounting. After all, we want a reckoning, too, for the political exploitation of the U.S. law-enforcement and intelligence apparatus from the 2016 campaign through the Biden years. No one, however, is going to be sent to prison over the latter, and I’d rather Trump didn’t end up there, either.

Of course, to repeat my admonition of a few months ago, a suspect can talk himself into getting indicted, and Trump can’t help himself but poke the bear. Forbearance is a two-way street, you know. If one wants indulgence, the least one can do is stop insulting and falsely accusing the investigators. This is not to whitewash the misconduct of the Justice Department and the FBI over the years (if you’ve been reading these pages, you know that’s not what we do around here). It is just a plea for common sense. If you don’t want to get charged, the worst strategy is to claim the cops planted the evidence, lied to the court, etc. It is not just a cabal of committed Democrats pushing the ever-expanding Trump probes. There are no-nonsense career law-enforcement officials, too. When Trump baselessly impeaches their integrity, he strengthens the force of their argument that Attorney General Merrick Garland must authorize indictments and trials so the public can see for itself that it is Trump, not his accusers, who behaved dishonorably.

Naturally, I expect that Trump will take this advice — offered by someone who would like to see him ride off into the sunset rather than into the penitentiary — just like he takes similar advice from others similarly minded. He’ll ignore it. Which, as night follows day, brings us to the latest.

The latest? You mean there’s more than the Mar-a-Lago investigation, the January 6 obstruction-of-Congress investigation, the Fulton County probe of the allegedly extortionate attempt to undo the 2020 popular election in Georgia, the Manhattan district attorney’s comparatively minor tax prosecution of the Trump Organization, and the New York attorney general’s lawsuit alleging massive civil fraud by Trump’s real-estate empire?

Yeah, there’s more. And bank on this: Inevitably, there will be yet more. That’s what happens when the wheels come off.

This week’s maddening story (reported by the New York Times) is the reemergence of allegations that, as president, Trump sicced the IRS on two banes of his existence: Jim Comey and Andrew McCabe, the FBI’s former director and deputy director. Both were terminated by Trump and blamed by him as the main culprits of the Russia “collusion” smear. The rueful CPA quip about the audit process to which Comey and McCabe were subjected is that it is “an autopsy without the benefit of death.” To put it mildly, it is ridiculously intrusive. Regardless of what happens in the inquiry, congressional Republicans would do well to find out why the IRS puts Americans through such agony in the absence of cause to suspect tax-cheating. (The agency claims such audits are done only randomly to a small percentage of taxpayers annually — as if that is a defense.)

The allegation has new legs because the aforementioned General Kelly, Trump’s second White House chief of staff (after Reince Priebus), has publicly claimed that he had to expend great energy, including in sometimes heated arguments with the former president, to prevent him from having his nemeses squeezed through the IRS wringer — an abuse reminiscent of the House Judiciary Committee’s second article of impeachment against President Nixon in 1974. As the Times reports, Trump denies having anything to do with the remarkable coincidence that both Comey and McCabe were subjected to these audits (McCabe, for the tax return he and his wife filed in 2019, the year he was terminated; Comey, for the joint return he filed in 2017, the year he was fired, which showed that, in fact, he and his wife overpaid their taxes and were owed a small refund).

A couple of other notably curious facts: The special audits happened after Kelly resigned his post while barely on speaking terms with Trump, but around the same time Trump’s relationship with his then-attorney general, Bill Barr, began to rupture over Barr’s refusal to indict Comey for allegedly mishandling classified information in connection with memos about his communications with Trump. To be sure, it was egregious of Comey to have leaked part of his memos to the New York Times. Still, as Barr correctly reasoned, the classified-information misstep was minor and technical at most, there was abundant evidence that Comey did not intend to disclose classified information to unauthorized persons, and there’s not a rational jury in America that would have convicted him. Trump, of course, did not want to hear any of that.

In any event, the IRS inspector general is trying to get to the bottom of how these supposedly random audits happened. It’s quite the coincidence that the same highly unusual process could befall not one but two of Trump’s bêtes noires. For the year Comey was audited, a taxpayer had a one-in-30,600 chance of being subjected to the process. For McCabe’s year, it was about one in 19,250.

Echoing Trump’s denial, IRS commissioner Charles P. Rettig, whom Trump appointed shortly before the audits, has disclaimed any role in selecting taxpayers for the process. It is a felony violation of federal law, with a potential five-year prison sentence, for executive officials, expressly including the president, to pressure the IRS to audit a particular taxpayer. With Trump announcing his candidacy for the 2024 Republican presidential nomination, and the Democrats maintaining control of the Senate (and its subpoena power) in the 2022 midterms, we can expect a high-energy, high-decibel investigation on Capitol Hill, too.

And then there is the very real possibility that Trump’s ostensibly lucrative media venture — the corporate structure for Truth Social, the alternative to Twitter that has become his main communications platform — could soon collapse, with the Justice Department and the SEC poised to pounce on claims of securities fraud.

This is an abstruse area of the law, but I’ll try to simplify.

Although the Trump Organization is a global enterprise with prodigious holdings, the former president has always run it as a family business — an entity that, because it is private, does not have to comply with extensive disclosure requirements. The trade-off is that private companies are barred from listing on exchanges that would enable them to raise capital in public markets. Yet, as is often the case, legal experts find work-arounds — in this instance, an entity known as a “special purpose acquisition company.” In a nutshell, a SPAC — sometimes described as a “blank-check company” — is a public corporation that is thus regulated under the securities laws, and that exists mainly to seek out a merger partner.

Critically, the seeking-out part is not supposed to happen until after the SPAC is formally established. See, securities regulators do not want private companies scheming to form SPACs with which they can merge in an effort to get the benefit of access to public financial markets while dodging securities-law disclosure. Ergo, the SEC prohibits SPACs from negotiating merger agreements prior to going public. Symmetrically, before companies (including SPACs) go public and begin selling stock, federal law requires them to disclose significant information that could affect stock prices; plainly, if a SPAC had a preexisting agreement to merge with a nonpublic company, that could profoundly affect its value and would thus have to be disclosed.

Truth Social is held by a new, private start-up, the Trump Media and Technology Group. To make a long story short, Trump Media has sought to obtain over a billion dollars in financing, but investment banks have been leery because of the array of pending investigations and lawsuits in which Trump is implicated, as well as his reckless behavior following the 2020 election. With that avenue closed, Trump Media began exploring the possibility of merging with a SPAC controlled by a Miami financier named Patrick Orlando.

Orlando had an existing SPAC called Benessere Capital Acquisition, which had raised $100 million. There was doubt on both sides, however, that this sum would be enough to capitalize Trump Media in a way that would make the hoped-for splash. So, Orlando is said to have explained to Trump that he had a second SPAC in mind, called Digital World Acquisition Corp., that had not yet launched.

A disgruntled Trump Media founder, Will Wilkerson, who has sought federal whistleblower protection, has told the SEC and the Washington Post that, on April 14, 2021, Orlando told him and other Trump Media founders that the Benessere SPAC plan was a no-go, but that Digital World SPAC could be an option. Yet, a few weeks later, in May 2021 when the registration form for Digital World was filed with the SEC, Orlando represented that the SPAC had not “initiated any substantive discussions, directly or indirectly, with any business combination target.”

Consequently, the SEC and a grand jury in the Southern District of New York (where the SDNY’s U.S. attorney’s office is famously aggressive in securities-fraud probes) are investigating whether Trump Media and Digital World violated securities law by secretly negotiating a merger before the Digital World SPAC was launched, and by Digital World’s failure to disclose the alleged arrangement in its required registration statement.

The stakes are high. Digital World’s initial public offering raised $300 million — its stock was once trading at $175 per share. There are reportedly Digital World investor commitments to capitalize the Trump Media venture with another $1 billion if the merger occurs — through a vehicle known as a “PIPE,” private investment in public equity. But with questions raised and the feds circling, investors are balking, and the SPAC’s share price has plunged to under $20 as of this writing.

Not surprisingly, Digital World founders worry that their investors now want no part of the Trump Media merger. They’ve been pleading with investors for months to delay a final vote because the merger would probably lose. Time, however, is running out. Digital World faces a December 8 deadline to persuade 65 percent of its shareholders to approve the merger. Absent another delay, then, if the merger is not approved, the capitalization of Trump Media will vanish — the original $300 million raised would have to be returned to investors, and the additional $1 billion would not be forthcoming.

If the merger with Digital World collapses, Trump Media could have other options. A potential merger with Rumble, an increasingly popular online video platform, is reportedly a real possibility. Clearly, though, the securities-fraud investigation complicates matters and puts Trump Media’s prospects in doubt.

Nor is that all. Wilkerson, the would-be whistleblower, has reportedly provided the government with documentary evidence that Trump pressured another Trump Media founder, Andy Litinsky (also known as “Andy Dean,” a one-time contestant on Trump’s reality-television show, The Apprentice), to surrender a portion of his stake to Trump’s wife, Melania. Wilkerson also claims that Trump’s adult sons, Don Jr. and Eric, have pushed for shares of Trump Media, even though he says they have had next to no participation in the extensive work that went into conceiving and standing up the business.

Meanwhile, there is a related grand-jury inquiry into possible insider trading, the bread-and-butter of SDNY and SEC securities-law enforcement. In the days before the October 20, 2021, announcement of the potential Trump Media and Digital World merger deal, there was frantic buying up of Digital World warrants (which are contracts to buy stock in the future at an already agreed-upon price). The warrant purchases were made by an obscure Miami investment firm, Rocket One Capital. Naturally, once the merger was announced, the value of the warrants shot up by 1,300 percent (as the stock value increased by 350 percent). And — well, I’ll be darned! — it turns out a top executive at Rocket One named Bruce Garelick just happens to have been on the board at Digital World (he has since resigned). According to the Times, unnamed sources say Garelick just might have mentioned the potential Trump Media–Digital World merger to some of his Rocket One colleagues before the merger plan was announced. We should note that no one has been charged at this point, and both Garelick and Rocket One, through spokesmen, deny any wrongdoing.

Oh, and did I mention that Trump’s would-be partners at Digital World have a key, Shanghai-based financial adviser that has previously been reprimanded by the SEC? Yup, the outfit is called ARC Group. The Times reports that its executives were barred from publicly listing three companies in 2017 due to material misstatements in required SEC filings and lack of cooperation in the ensuing investigation. How is it that, when one takes a hard look at Trump transactions, there is so often a Michael Cohen–type “fixer” in the mix?

If your head is spinning, get used to being dizzy. What we’re seeing is an aging man with a history of poor judgment being consumed by a combustible compound: his propensity to court trouble combined with his enemies’ zeal to nail him. Maybe in these latest follies, he hasn’t done anything wrong, or at least actionable. But is this really what the Republican Party wants in a candidate for a presidential election that is crucial to win: Two years of investigatory metastasis to nominate an erratic 78-year-old who is certain to lose and, even if he arguably could win, would be a lame duck the moment he was sworn in?