This is why Trump argues there was no crime at all, not even the misdemeanor falsification of records

Intent to defraud. Remember that phrase. You’re probably going to be hearing it a lot.

Here’s why. Even some of the most vigorous critics of Manhattan District Attorney Alvin Bragg’s prosecution of former President Donald Trump have assumed that, technically, he is guilty of a petty offense – the New York misdemeanor of falsifying business records. 

Bragg's critics argue that this is an outrageous charge, not because Trump is innocent of falsifying records, but because Bragg would never bring such a piddling charge against anyone but Trump. Bragg is an elected Democrat in the radical "progressive prosecutor" mold; his default setting is anti-enforcement, and he campaigned in blue, blue Manhattan by vowing to exploit the power of the DA’s office against Trump.

In the Stormy Daniels caper, Trump’s then-"fixer" Michael Cohen laid out $130,000 to get the porn star (whose real name is Stephanie Clifford) to agree to remain silent about an affair she claims to have had with Trump in 2006. There is nothing illegal about such a non-disclosure agreement; indeed, NDAs are a staple of civil litigation settlements and similar private arrangements. 

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Nevertheless, companies that do business and pay taxes in New York, such as the Trump organization, are required to maintain accurate books and records, so if an NDA bears on the business, it must be accounted for accurately. Here, Cohen sought reimbursement from the Trump organization, where he worked when he completed the NDA with Daniels a few days before the 2016 election. It was agreed that Cohen would be reimbursed. (I use the passive voice here because, though it is undisputed that Trump reimbursed Cohen, the extent to which he was involved in the structure and details of the repayment is sure to be contested.) 

It seems obvious that the resulting business records are false: In reality, Trump paid a debt that he owed Cohen; but in the records, it was made to appear that Cohen, a lawyer, was paid fees for ongoing legal representation. 

In sum, the $130,000 Trump owed Cohen was doubled to $260,000 to ensure that Cohen would not take a tax hit. (Legal fees are taxable income; the payment of a debt is not.) Then Cohen was required to submit a monthly invoice throughout 2017, and was paid by check in monthly installments – the early checks drawn on Trump’s revocable trust account and signed by the trustees (Donald Trump Jr. and Trump organization CFO Allen Weisselberg), the others signed by then-President Trump himself and drawn on his personal bank account. 

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(The above is a simplified explanation. Other money was owed to Cohen for campaign polling and he was also given a bonus; these were added into the mix with the NDA-related $260,000 and factored into both the invoices Cohen submitted and the checks he received in payment.)

Since record entries that make a loan payment look like payment of legal fees are false, mustn’t Trump be guilty of misdemeanor falsification of business records? Not necessarily.

In an interview Sunday by Fox News’s Shannon Bream, former Attorney General Bill Barr opined that Bragg’s case lacks a legal basis. After underscoring that NDAs are legal, Barr asserted that Bragg’s prosecutors are "saying he falsified the corporate record. But for that, to even be a misdemeanor, you have to be trying to defraud somebody, and it's unclear exactly who was defrauded. This is his own company."

The former AG makes a significant point. 

The New York penal statute codifying the misdemeanor of falsifying business records is Section 175.05. In pertinent part, it states: "A person is guilty of falsifying business records … when, with intent to defraud, he … makes or causes a false entry in the business records of an enterprise" (emphasis added).

As Barr points out, it is not enough for prosecutors to show that a defendant caused a false entry to be made in business records. Section 175.05 explicitly adds the separate, essential element of proving that the defendant acted with intent to defraud.

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It would be understandable, especially for non-lawyers, to ask, "What could be more indicative of fraudulent intent than the act of making a false entry?" But that is not how statutes are construed, especially in the criminal law, where defendants are presumed innocent and are given the benefit of any doubt.

In statutory construction we indulge a presumption against what’s called "surplusage." This means we assume that legislatures don’t add terms to a statute for no reason. Applying that principle here, we have to conclude that if merely making a false entry was enough to prove guilt, there would have been no reason for New York lawmakers to add that the falsification had to be done "with intent to defraud" — those words would just be pointless surplus. So "intent to defraud" has to mean something separate and in addition to the falsification.

This is similar to federal false statements cases. We refer to the crime as making a "false statement." But not every false statement is actionable; the federal statute adds that the falsity must be material – it had to be of importance to the matter under investigation. In the New York statute, "intent to defraud" performs the same function: It ensures that the law does not criminalize trivial false entries that harm no one.

There is dispute in the law about what "intent to defraud" means. Prosecutors always want it broadly defined, such that the statute reaches any deceptive action – as if "intent to defraud" were surplusage. Defendants want the phrase narrowed to its commonsense meaning: trying to obtain money or property under false pretenses. 

Expect Trump’s lawyers to push hard for this second interpretation. We haven’t seen the indictment yet, but so far there has been no suggestion that the state of New York or anyone else was harmed in the slightest, much less harmed financially, by the falsification of the records. 

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Trump will argue, plausibly, that his only intention was to conceal a hush money deal with a porn star, not to swindle anyone. And so far no one has alleged that the Trump organization’s booking of the NDA reimbursement amounted to a financial fraud or tax evasion – even though Bragg’s office has prosecuted the Trump organization, and its top financial officer, for minor tax offenses.

Rest assured: If there had been evidence that victims were fleeced because Trump defrauded them, the federal authorities who originally had this investigation would never have dropped it.

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