Can Trump’s Entities Take the 5th?

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.

See Lila L. Inman, Personal Enough for Protection: The Fifth Amendment and Single-Member LLCs, 58 Wm. & Mary L. Rev. 1067 (2017).

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.

15 thoughts on “Can Trump’s Entities Take the 5th?”

  1. Wasn't the whole point of the 5th to reduce the incentive for authorities to torture people? How that means that accountants should not turn over financial papers when there is probable cause to believe they are evidence of a crime is beyond me.

    1. My recollection of the Supreme Court's 1976 decision in Fisher v US is precisely the opposite of the rule that you are complaining about. That a suspect has no Fifth Amendment right to prevent their accountant from turning over papers in response to a subpoena or summons. Nor to intervene and quash if the papers are seized under a warrant. Of course, an accountant, like anyone else, can invoke the Fifth Amendment if responding to process would compel self-incrimination on their own part.

        1. I don't understand at all that you mean by "you got the sign right." You did not make your initial comment intelligible, is the problem, at least not to someone who has studied and written about the Fifth Amendment (which includes myself). If you have an important point to make, you might try again. Or you could let it drop. Oh, and by the way, No, reducing the incentive for torture and other oppressive forms of interrogation is not the "whole point" of the Fifth Amendment privilege. It is an important part of the justification, sure, but not the whole purpose. It also underlines and complements the Due Process principle that the entire burden of proof in a criminal case is on the Government (or the State), and that the accused may therefore remain silent without adverse inference, and potentially prevail if the prosecution does not establish guilt by independent evidence beyond a reasonable doubt.

  2. Seems to me that there is probably no doctrine in all of constitutional criminal procedure less defensible than the "collective entity" rule under the Fifth Amendment Self-Incrimination clause. Corporations and partnerships are deemed to be "persons" under all other clauses of the Fifth Amendment, including Double Jeopardy, Due Process, Just Compensation, etc. Collective entities also have full Fourth Amendment, First Amendment, and Sixth Amendment rights. I understand that the case law on the self-incrimination point is "well settled," but what is the principled rationale for the distinction?

    1. Supposing that there is no principled rationale for the distinction, do you think that one of the available options is obviously better than the other? (Those options being: Extend the right against self-incrimination to artificial persons, or deny the others to same?)

      In general I'm inclined toward the latter, but I could be overlooking some really important babies in that bathwater. I bet you've considered the question more deeply than I have.

  3. I would extend the right, not cut back others. People act collectively to accomplish their individual and common purposes, and organize to do so, sometimes into formal structures like partnerships, trusts, and corporations. The legal system (and society more generally) recognizes those collective entities, protects and (properly) regulates them. I do not think the right to the free exercise of religion, for example, could possibly be protected if churches that choose to incorporate were not covered by that right. Same with freedom of the press, which today must cover the New York Times, Regnery Press, and The Nation, just as it protects an individual printing on paper or disseminating the electronic equivalent of 1770s handbills. Same with the right against search and seizure. I do not think "the People" would be "secure in their … papers and effects" if police could seize our bank or phone records without a warrant because they were created and kept by incorporated businesses. And when a corporation is charged with a crime, prosecutors should not be able to insist that they be tried without a lawyer, nor without a jury for that matter, or in secret, nor convicted on proof less than beyond a reasonable doubt. Nor corporate or partnership property seized on government whim ("without due process of law"). I could go on and on. The manner in which rights are limited and regulated, for those rights – most of them – which are not absolute (like freedom of speech, for example) could be regulated differently so as to take into account the nature of corporate "speech" (including whether it is commercial or political, for example, or tends to deny another's exercise of rights), but that's a different question from whether collective entities should be understood to enjoy constitutional rights at all.

    1. There are collectives, and then there are corporations. The former are just aggregates of people, who individually retain their rights. Corporations are created by law and are legally separate from any particular person. So what rights and responsibilities they have are determined quite differently from those pertaining to natural persons.

      We could, of course, endow corporations with natural rights. Would we then execute the stock-holders when a corporation committed murder? Or just the senior executives?

      1. Your comment does not respond to the substance of any of my arguments, so I will not reply to the substance of yours except on one point. If the premise of your argument is that "Corporations … are legally separate from any particular person" then I don't understand at all why you would ask whether the corporation's stockholders or executives would be subject to criminal punishment for the crimes of the corporations. We don't punish one person for another person's crimes under any circumstances, only for their own. I don't believe in capital punishment at all, but putting that aside, if a corporation were convicted of a capital offense, it would be subject to being dissolved by law, just as it was (as you say) "created by law." But that has nothing to do with the constitutional argument I was making.

  4. My point is that putting corporations into the same class as natural persons forces a fork – either they then become endowed with rights and responsibilities just as natural persons are: have free speech, immunity from unreasonable search etc, can be fined, jailed, executed as appropriate; or if the endowment is treated as flowing from their character as collectives of natural persons, then those persons are the holders of rights and therefore bear the burden of punishment. You can't both have rights and be immune from the consequences of breaching them for others.

    At the moment corporations have no rights – they have immunities and obligations specified in particular laws. They could be abolished as a class by law. Recent Supreme Court decisions seem to be muddying this, but only to grant rights – not to enforce the corresponding obligations.

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