The New York Attorney General's announcement about a 'criminal' Trump Organization probe could flip more witnesses

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  • The New York AG's office said its investigation into the Trump Organization is criminal in nature.

  • The unusual announcement could help shake out more cooperating witnesses, legal experts say.

  • By working closely with the Manhattan DA, the NYAG signaled a low chance of legal turf fights.

  • See more stories on Insider's business page.

The New York Attorney General's unusual announcement that its investigation into the Trump Organization is now criminal could be part of a strategy to shake loose more cooperating witnesses, according to legal experts.

Late Tuesday night, a spokesperson for the attorney general's office first told CNN that its investigation was being conducted "in a criminal capacity."

The spokesperson also said prosecutors were working with the Manhattan District Attorney's office, which has so far been running its own separate investigation into former president Donald Trump's and the Trump Organization's finances.

"We have informed the Trump Organization that our investigation into the organization is no longer purely civil in nature," Fabien Levy, New York State Attorney General Letitia James's press secretary, told Insider. "We are now actively investigating the Trump Organization in a criminal capacity, along with the Manhattan DA."

The statement struck legal observers as unusual.

The New York Attorney General's and Manhattan District Attorney's offices rarely make public comments about the progress of ongoing investigations - unless they're highlighting some victory in court. Manhattan District Attorney Cyrus Vance Jr. commented on winning Supreme Court cases to subpoena Trump's tax documents, and New York Attorney General Letitia James addressed the subpoena of Eric Trump. Both offices declined Insider's requests for comment beyond Levy's statement.

An attorney representing Jennifer Weisselberg, a cooperating witness in both investigations who was married to the son of the Trump Organization's CFO, said he had already been in contact with attorneys from the criminal division of James' office.

Duncan Levin told Insider the notion that James' investigation was criminal in nature "did not come as news" to him, nor was it news that her attorneys were teaming up with Vance's.

"They've told us previously that they're coordinating their efforts with the DA's office," he said. "We understand that they're in touch with each other and that they're coordinating their investigations together. We've known that for a while."

Shaking loose more cooperating witnesses

Prosecutors in both offices are said to be examining whether the former president or his company committed financial crimes by keeping two sets of books: one that presented a rosy portrait of finances to secure favorable insurance and loan terms, and another that showed more dire figures in order to evade taxes.

Jeff Robbins, a former attorney for the US Senate Permanent Subcommittee on Investigations, oversaw money-laundering probes as a federal prosecutor. He said the statement from James' office was likely designed to "shake loose" more people in Trump's orbit who could cooperate.

michael cohen
Michael Cohen leaves federal court on Aug. 21, 2018, in New York. AP Photo/Mary Altaffer

Some potential witnesses or cooperators may have decided there was limited risk in ignoring prosecutors' phone calls in a civil investigation; there's a bigger risk if they don't cooperate with a criminal investigation, he said.

"One possible calculation in making this announcement yesterday is to announce to those people: 'You know what, the time for standing on the sidelines is over,'" Robbins, now the co-chair of the Congressional Investigations practice at Saul Ewing Arnstein & Lehr, told Insider.

High-profile people in Trump's orbit already know that prosecutors have been seeking their cooperation. Michael Cohen, for example, has testified around a dozen times for the Manhattan District Attorney's office. Allen Weisselberg, the Trump Organization CFO, appears to have rebuffed requests for cooperation.

But peripheral figures - former rank-and-file employees, tax preparers, insurance analysts, accountants - can still be helpful for prosecutors, according to Randy Zelin, a professor at Cornell Law School and white-collar criminal defense attorney at Wilk Auslander LLP. He said Tuesday's announcement could bring them out of the shadows.

"The announcement is meant to do a couple of things, the most important of which just to continue to shake people up," Zelin told Insider. "Anyone who in Trump's orbit hearing that announcement is probably, aside from the sphincter tightening, they're immediately on the phone with their lawyer."

Robbing Trump and his company of a strategy to challenge potential charges

It's not clear whether the Manhattan DA or New York AG will bring charges and, if they do, what those charges may be. Prosecutors could charge Trump personally; charge only the Trump Organization; charge certain executives; or they may not bring charges at all.

In a 909-word statement Wednesday, Trump derided the investigations as illegitimate and politically motivated.

The announcement of closer cooperation between the two offices could make it harder for Trump or the Trump Organization to evade litigation, however.

Defendants often try to dismiss or delay court proceedings based on jurisdictional issues. Vance's office may have the authority to bring certain charges that James's office doesn't, and vice versa.

donald trump tower elevator
Donald Trump boards the elevator in Trump Tower in 2017. DOMINICK REUTER/AFP via Getty Images

It's common for defendants to argue the prosecutor who brought a case doesn't have the authority to do so, and ask a judge to dismiss the case on those grounds. Prosecutors also sometimes try to take credit for major cases by claiming they have the sole authority to bring charges.

But the announcement that James' office is working with Vance's suggests they've worked out jurisdictional turfs between themselves, Zelin told Insider, making it less likely that Trump or his company can tie up their potential cases in the courts.

"There are times when there's a clash of egos. And there are times when egos get put aside and there's enough for everyone," Zelin said. "I think here - when you're talking about going after the former president of the United States, which in and of itself is going to be a daunting task - the agencies are very happy to say, OK, let's divide and conquer here."

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