I view myself as a strong civil libertarian. I also view myself as a strong opponent of Donald Trump. In a small way, there may be a point at which these two aspects of my belief system collide.
Allen Weisselberg is often described as Trump’s accountant. But that’s not his primary role. Rather, he’s the CFO for the myriad Trump entities: Trump’s trusts, Trump’s LLCs, and, I believe, Trump’s alleged charitable foundation. Does Trump’s privilege to not “be compelled in any criminal case to be a witness against himself” extend to the documents, etc., held by any of these entities?
At the outset, we have to divide the entities into two categories: On one hand, those entities in which Trump shared an economic interest with others, partnerships and LLCs that have other members, for instance. And, on the other hand, we have those entities with respect to which it is likely that Trump could reasonably say “the entity, it’s me.” Cf., Daniel S. Kleinberger & Carter G. Bishop, The Single-Member Limited Liability Company as Disregarded Entity. (Ok, please stop laughing and do not mention that Trump probably believes “L’etat c’est moi.” Remember, my premise was that this discussion applied to entities that Trump “could reasonably say” are an extension of himself.)
As to the first category, there is a well-established doctrine, the “collective entity” doctrine. As described by the court in Bank of America, N.A. v. Roberts (U.S.D.C., E.D. Mo., Case No. 4:12CV609 AGF, March 26, 2014):
The Fifth Amendment privilege is personal – it protects “an individual from compelled production of his personal papers and effects . . . .” Bellis v. United States, 417 U.S. 85, 87 (1975) (emphasis supplied); see also United States v. White, 322 U.S. 694, 698 (1944) (explaining that the “constitutional privilege against self-incrimination is essentially a personal one, applying only to natural individuals”). In light of the personal nature of the privilege, courts hold under the so-called “collective entity” doctrine, that corporations and other “collective entities” cannot claim the privilege against self-incrimination. See Braswell v. United States, 487 U.S. 99, 102 (acknowledging that “it is well established that such artificial entities are not protected by the Fifth Amendment”).
However, as I noted in a previous posting, there appear to be revocable grantor trusts that are mere personal pocketbooks for Trump. In fact, these trusts don’t even file separate tax returns. The Roberts opinion noted that:
The Supreme Court has explained that specific indicia like the size or form of a business enterprise are not determinative.
“[W]e do not believe that the [test for determining whether a trust is a ‘collective entity’] can be reduced to a simple proposition based solely upon the size of the organization. . . . [T]he applicability of the privilege should not turn on an insubstantial difference in the form of the business enterprise.”
Bellis, 417 U.S. at 88.
Applying this principle, the Ninth Circuit has held that a trust’s tax status and its description as a “grantor-controlled” shell entity was “irrelevant” to the application of the “collective entity” doctrine. In re Grand Jury Proceedings, 633 F.2d 754, 757 (9th Cir. 1980) (holding that “treatment for tax purposes is largely irrelevant to the determination of whether it is an organization separate and apart from its creator”); see also In re Grand Jury Subpoena, 973 F.2d 45, 50 n.8 (1st Cir. 1992) (noting that failure to file separate tax return did not preclude “collective entity” status). Although courts may consider tax status, they do not deem it determinative of “collective entity status.” Instead, “[a] common thread . . . is that the collective entity doctrine should apply to the records of persons who purport to act through collective entities even though there may be no true entity.” United States v. O’Shea, 662 F. Supp. 2d 535, 545 (S.D. W.Va. 2009); see also Watson v. C.I.R., 690 F.2d 429, 431 (5th Cir. 1982) (holding that the Fifth Amendment privilege did not extend to documents . . . “held by an individual in a representative capacity” because “the fifth amendment privilege is purely personal”).
The court in Roberts then went on to find that:
The Roberts chose to create the Trusts, place assets in the Trusts, and act as trustees. Presumably, they formed the Trusts because they found it beneficial to do so. The law affords them that benefit, but it also requires them to be bound by the consequences of the entities they formed and used. The Roberts cannot now ignore the existence of the trust entities to avoid a concomitant obligation to produce the Trusts’ records.
Well then, it’s an open and shut case and all of the records of all of the entities are subject to discovery, right? Well, not so fast.
In a fairly recent law review article, it was argued that:
Given the single member LLC’s unique elements, courts should be mindful that some contexts require a variation of the considerations and principles applied to other business entities. The application of the Fifth Amendment is one such context. [C]ourts must permit single-member LLCs to independently invoke Fifth Amendment protection. Support for this proposition is found both derivatively and explicitly in Supreme Court precedent, in which the Court hinted at two possible exceptions to the collective entity doctrine. The distinctly personal and confidential nature of the business makes the Bellis exception applicable to single-member LLCs.
My guess is that Weisselberg will likely play Sacajawea to the Realm of Trump. After all, most of the Trump entities have owners other than Trump. But it would be unfortunate if in the rush to bring a truly dangerous individual to justice, significant Constitutional considerations were trampled.