Tag Archives: Walter Shaub

TRUMP AND THE MORGAN LEWIS MESS — CONTINUED

Posted on by
Reply

On March 7, 2016, Sheri Dillon and William Nelson put their firm, Morgan, Lewis & Bcckius, on a slippery slope with their letter purporting to justify Trump’s refusal to release his tax returns. It’s been downhill ever since. Confirming that the IRS had closed its audits through 2008, they reinforced Trump’s “under audit” excuse for not releasing any returns at all. His returns for 2009 forward, they said, “are continuations of prior, closed examinations.” On January 22, Kellyanne Conway confirmed that Trump was never going to produce those returns. Period.

As I wrote on April 12, 2017, the descent continued with the Trump/Dillon press conference on January 11. “President-elect Trump wants there to be no doubt in the minds of the American public that he is completely isolating himself from his business interests,” Dillon explained amid a mountain of paper. Some of the documents appeared to be blank and some of the folders lacked labels. Why the esteemed Fred Fielding lent his name to the cause is a mystery. Substantively, attorneys knew immediately that the Dillon/Nelson/Fielding/Morgan Lewis plan was a joke.

Farce Turns to Tragedy

To recap the failures of the plan itself, Dillon said that Trump would put his business holdings in a revocable trust—meaningless window dressing. He would continue to own and benefit from every Trump asset in his portfolio. And he wasn’t selling any of the most valuable ones involving the family business. Still, she explained, no one should worry because his sons, Eric and Donald Jr., would run the company.

Six weeks later, Eric Trump told Forbes that he would continue to update his father on the family business: “’Yeah, on the bottom line, profitability reports and stuff like that, but you know, that’s about it.’ How often will those reports be, every quarter? ‘Depending, yeah, depending.’ Could be more, could be less? ‘Yeah, probably quarterly.’ One thing is clear: ‘My father and I are very close. I talk to him a lot. We’re pretty inseparable.’”

Meanwhile, Donald Jr. has been campaigning for Montana GOP congressional candidate Greg Gianforte—who stands accused of assaulting a reporter.

Fallout

Shortly after Dillon’s press conference, H. Scott Wallace, co-chair of the Wallace Global Fund, sent a blistering termination letter to Morgan Lewis chair Jami Wintz McKeon. My previous post reviewed it in detail. Suffice it to say that Wallace was not pleased with Morgan Lewis’ willingness to help Trump sell democracy in return for billable hours.

“We believe that the legal advice given to [Trump] by your partner Sheri Dillon, in the January 11 press conference and background ‘white paper,’ is not just simplistic and ill-founded,” Wallace wrote, “but that it empowers and even encourages impeachable offenses and undetectable conflicts of interest by America’s highest official, and thus is an unprecedented invitation to corruption and an assault on our democracy.”

“It is painfully obvious that Trump is using his office for personal gain,” Wallace continued. “And Morgan Lewis is enabling and legitimizing this… Americans deserve a president of undivided loyalty. Your firm has denied them that.”

From Mar-a-Lago initiation fees to the travel ban to China trademarks, Wallace observed that “the ethical carnage is mounting.” It still is.

Meanwhile, the Kushner family was trading on Trump ties to woo Chinese investors “into wealthy luxury developments” with $500,000 “investor visas.” So it’s not just the presidency that’s for sale, it’s America itself.

Bottoming Out

On May 12, the White House released another Dillon/Nelson letter that was supposed to take the heat off Trump’s financial connections to Russia. But it became fodder for another round of jokes—just as Dillon’s January 11 press conference had.

Then on May 20, the Associated Press reported that Dillon “initially wanted [Trump] to submit an updated financial disclosure without certifying the information as true” because he was filing voluntarily this year. After discussions with the director of the Office of Government Ethics, Walter Shaub, Dillon evidently agreed that Trump would sign and file by mid-June. Let’s see if that happens.

On May 24, The New York Times reported on another January 11 promise that Dillon made and Trump isn’t keeping: to give the U.S. Treasury all profits from Trump hotels and similar businesses derived from foreign governments. In response to a House Oversight Committee request, the Trump Organization produced a slick brochure explaining why it was impractical to comply “fully and completely” with that promise.

Here is my next prediction: In corporate boardrooms and law school campuses, the damage to the Morgan Lewis brand will continue. Business leaders will act on the belief that preserving critical norms of democracy should outweigh a firm’s desire to do almost anything for a client’s billable hour. But the most discerning of general counsels will leave Morgan Lewis for an entirely different reason that has nothing to do with Trump, politics, the appropriate limits of a lawyer’s role as client advocate, or every attorney’s sworn duty to protect the U.S. Constitution. Substantively, the Trump conflicts plan and the related disasters that have followed constitute embarrassingly bad lawyering.

One more note of interest to leaders of big law firms obsessed with growth for the sake of growth: Sheri Dillon and William Nelson are recent lateral hires. Both were at Bingham McCutchen until a few months before it collapsed in 2014.

TRUMP CONFLICTS PLAN – Part 3

Posted on by
Reply

It seems like a long time ago. On January 11, Donald Trump’s lawyers revealed a plan to resolve the clash between his business interests and his presidential duties. Whether the result of impulse, intention, or incompetence, his subsequent chaos has accomplished one objective: He diverted attention from his plan’s assault on one of American democracy’s central pillars: a presidency free of institutionalized corruption.

This installment addresses his conflict of interest problems. They are related to — but distinct from — his constitutional Emoluments Clause violations addressed in Part 2 of this series. Part 1 described the unfortunate role that Sheri Dillon and her law firm, Morgan, Lewis & Bockius, played in shilling for Trump’s plan.

A Lawyerly Approach

Dillon, a tax lawyer, focused on a technical legal question: Does the federal conflict of interest statute applicable to all other federal employees apply to the president?

By its terms, the answer is no. But just because something is legal doesn’t make it right. And when it comes to preserving the integrity of the presidency in ways that protect it from corruption and impropriety, legal permissibility is just the beginning of the relevant inquiry. But not for Trump.

Trump’s attitude in making the deal that resulted in the Morgan Lewis Plan was that of a negotiator who held all the cards. Whatever he offered, his opposing parties — the office of the president and the country — could not refuse. He admitted it:

“[A]s you know, I have a no-conflict situation because I’m president….it’s a nice thing to have… I have something that others don’t have…”

Bigger Stakes

To counter Trump’s continuing conflation of the issues, Walter Shaub, director of the Office of Government Ethics, set him straight:

“Now, some have said that the President can’t have a conflict of interest, but that is quite obviously not true. I think the most charitable way to understand such statements is that they are referring to a particular conflict of interest law that doesn’t apply to the President…”

As Shaub explained, “Common sense dictates that a President can, of course, have very real conflicts of interest. A conflict of interest is anything that creates an incentive to put your own interests before the interests of the people you serve.”

Who Represents America? 

Shaub then cited Chief Justice Earl Warren’s opinion in a 1961 U.S. Supreme Court decision. The chief justice observed that a conflict of interest is “an evil which endangers the very fabric of a democratic society, for a democracy is effective only if the people have faith in those who govern, and that faith is bound to be shattered when high officials and their appointees engage in activities which arouse suspicions of corruption.”

Shaub outlined the implications for Morgan Lewis’s assignment:

“That same Court referred to what it called a ‘moral principle’ underlying concerns about conflicts of interest. The Court cited…’the Biblical admonition that no man may serve two masters, a maxim which is especially pertinent if one of the masters happens to be economic self-interest.’ A President is no more immune to the influence of two masters than any subordinate official. In fact, our common experience of human affairs suggests that the potential for corruption only grows with the increase of power.”

“For this reason,” Shaub emphasized, “it’s been the consistent policy of the executive branch that the president should act as though the financial conflict of interest law applied.”

The question isn’t mere technical compliance with a statute; it’s preserving a central norm that underlies the moral authority of the nation’s highest office.

What Would Scalia Say

Even Trump’s model U.S. Supreme Court Justice, Antonin Scalia, lands on Shaub’s side of the argument. In a 1974 memorandum, then-Justice Department attorney Scalia concluded that the text of a particular conflict of interest law didn’t apply to the president. Remarkably, Dillon cited that memorandum to support her position. She didn’t discuss Scalia’s final recommendation in that memo:

“Notwithstanding the conclusion that neither the Executive Order nor the regulations pursuant to it legally bind the President or Vice-President, it would be undesirable as a matter of policy for the President or Vice-President to engage in conduct proscribed by [them]…. Failure to observe these standards will furnish a simple basis for damaging criticism, whether or not they technically apply,”

Shaub emphasized Scalia’s point: Those at the top of government set the example for everyone else — at least they should.

“The sheer obviousness of Justice Scalia’s words,” Shaub continued, “becomes apparent if you just ask yourself one question: Should a President hold himself to a lower standard than his own appointees?”

Missing the Big Picture

The Morgan Lewis Plan ignores that big picture. In waiving the attorney-client privilege by divulging Trump’s directives for developing a plan, Dillon opened the door to several unanswered questions:

— What limits did put he on removing himself from his business?

— Did his attorneys recommend additional steps?

— Did Trump reject them?

Here’s a directive that Trump did not give:

“I want to preserve the integrity of the presidency. There can be no basis for any claim that anyone — foreign or domestic — is trying to curry favor through my family businesses. Even the appearance of a bribe, corruption, self dealing, or other impropriety is unacceptable. Tell me what is necessary, and I will do it. The presidency demands no less.”

That command would not have produced the plan that Dillon tried to sell Americans on January 11:

— Rather than divest Trump from his business, it allows him to reap its benefits while in office.

— Rather than establish an independent trustee to manage his business assets, it places control in the hands of his two adult sons and a current Trump executive.

— Rather than maintain even the pretense of a blind trust, it permits Trump to see periodic reports of how his business is doing.

The plan’s failures are equally evident from its illusory window dressing: a “trust” that is far from blind; a promise that the Trump Organization won’t do any new foreign deals; an “Ethics Advisor” to sign off on new domestic deals (backsliding from Trump’s December 12 tweet, “No new deals will be done during my term(s) in office”); an unenforceable assurance that Trump will learn about new deals “only through the media, as the American people would.” (The last promise is another violation of a blind trust principle, namely, that he should know nothing whatsoever about his personal financial affairs while in office.)

And then there is the ultimate window dressing in human form — Fred Fielding, who served as associate and deputy counsel for President Richard Nixon from 1970 to January 1, 1974. He was there for Watergate. He was there for the “Saturday Night Massacre” when Nixon fired his attorney general and deputy AG before finding someone willing fire independent counsel Archibald Cox, who had asked Nixon to produce his White House tapes.

“Mr. Fielding has been extensively involved with and approved this plan,” Dillon declared at the press conference.

Fielding didn’t say a word.

It’s hard to believe that it was only three weeks ago. I wonder what Fred Fielding thought on January 30, when Trump fired acting Attorney General Sally Yates. In eroding the integrity and dignity of the presidency, Trump has already made Richard Nixon look like an amateur — and a saint.