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    31 Oct 2016

    Donald Trump's companies destroyed or hid documents in defiance of court orders

    Over the course of decades, Donald Trump’s companies have systematically destroyed or hidden thousands of emails, digital records and paper documents demanded in official proceedings, often in defiance of court orders. These tactics—exposed by a Newsweek review of thousands of pages of court filings, judicial orders and affidavits from an array of court cases—have enraged judges, prosecutors, opposing lawyers and the many ordinary citizens entangled in litigation with Trump. In each instance, Trump and entities he controlled also erected numerous hurdles that made lawsuits drag on for years, forcing courtroom opponents to spend huge sums of money in legal fees as they struggled—sometimes in vain—to obtain records.

    This behavior is of particular import given Trump’s frequent condemnations of Hillary Clinton, his Democratic opponent, for having deleted more than 30,000 emails from a server she used during her time as secretary of state. While Clinton and her lawyers have said all of those emails were personal, Trump has suggested repeatedly on the campaign trail that they were government documents Clinton was trying to hide and that destroying them constituted a crime. The allegation—which the FBI concluded was not supported by any evidence—is a crowd-pleaser at Trump rallies, often greeted by supporters chanting, “Lock her up!”

     TRUMP’S USE OF DECEPTION and untruthful affidavits, as well as the hiding or improper destruction of documents, dates back to at least 1973, when the Republican nominee, his father and their real estate company battled the federal government over civil charges that they refused to rent apartments to African-Americans. The Trump strategy was simple: deny, impede and delay, while destroying documents the court had ordered them to hand over.
     Shortly after the government filed its case in October, Trump attacked: He falsely declared to reporters that the feds had no evidence he and his father discriminated against minorities, but instead were attempting to force them to lease to welfare recipients who couldn’t pay their rent.
    The family’s attempts to slow down the federal case were at times nonsensical. Trump submitted an affidavit contending that the government had engaged in some unspecified wrongdoing by releasing statements to the press on the day it brought the case without first having any “formal
    communications” with him; he contended that he’d learned of the complaint only while listening to his car radio that morning. But Trump’s sworn statement was a lie. Court records show that the government had filed its complaint at 10 a.m. and phoned him almost immediately afterward. The government later notified the media with a press release.
    Prosecutors responded to Trump’s affidavit by showing he had fudged his claim by using the term “formal communication”—an acknowledgment, they said, that he had received what only he would characterize as an informal notification—which they described as an intentional effort to mislead the court and the public. But the allegation slowed the case; it required government lawyers to appear in court to shoot down Trump’s false charge.
    The Trumps had more delaying tactics. Trump announced in a press conference that his family and their company were bringing a $100 million countersuit against the government for libel; anonymous tenants and community leaders, he said, had been calling and writing letters expressing shock at the government’s “outrageous lies.” Once again, motions, replies and hearings followed. Once again, the court threw out the Trump allegations.

    For months, the Trumps ignored the government’s discovery demands, even though court procedure in a civil or criminal case requires each side to produce relevant documents in a timely manner. This allows for the plaintiffs or prosecutors to develop more evidence in support of their claims, as well as for the defense to gather proof to fight the case against them. When litigation is filed or even contemplated, scrupulous lawyers and corporations immediately impose document-retention programs or require that any shredding or disposing of records be halted. Courts have handed down severe sanctions or even criminal charges of obstruction of justice against executives and companies that destroyed records because they knew they were going to be sued.
    Yet when the government filed its standard discovery requests, the Trumps reacted as though seeking that information was outrageous. They argued in court that prosecutors had no case and wanted to riffle through corporate files on a fishing expedition. Once again, this led to more delays, more replies, more hearings...and another specious argument thrown out of court.
    Six months after the original filing, the case was nowhere because the Trumps had repeatedly ignored the deadlines to produce records and answers to questions, known as interrogatories. When a government attorney finally telephoned a Trump lawyer to find out why, he was told the Trumps had not even begun preparing their answers and had no plans to do so. The Trumps also postponed and blocked depositions, refused to provide a description of their records, as required, and would not turn over any documents.

    Finally, under subpoena, Trump appeared for a short deposition. When asked about the missing documents, he made a shocking admission: The Trumps had been destroying their corporate records for the previous six months and had no document-retention program. They had conducted no inspections to determine which files might have been sought in the discovery requests or might otherwise be related to the case. Instead, in order to “save space,” Trump testified, officials with his company had been tossing documents into the shredder and garbage.
    The government dashed to court, seeking sanctions against the Trumps. Prosecutors asked the judge to allow them to search through the corporate files or simply declare the Trumps in default and enter a judgment against them. The judge opted to allow the government access to the company offices so they could find the records themselves.
    In three letters and three phone calls, the government notified the Trumps that this inspection would take place on June 12, 1974. When they arrived at the Trump offices, Trump was there, but he and everyone else were “surprised” that prosecutors had come and refused to allow them access to documents without their defense lawyers present. A prosecutor called those lawyers, but they were not in their offices. The frustrated prosecutors then gave up and headed back to court.

    THE TRUMP STRATEGY WAS SIMPLE: DENY, IMPEDE AND DELAY, WHILE DESTROYING DOCUMENTS THE COURT HAD ORDERED THEM TO HAND OVER.

    They were then hit with a new delaying tactic. The Trumps submitted a filing based on statements by Trump that radically misrepresented what had occurred that day. He claimed a prosecutor, Donna Goldstein, had arrived at the company without notifying the Trumps’ counsel, refused to telephone their lawyer and demanded access to Trump’s office. The prosecutor—accompanied, the Trumps claimed, by five “stormtroopers”—then banged on doors throughout the office, insisting she and her team be allowed to “swarm haphazardly through all the Trump files and to totally disrupt their daily business routine.”

    At the same time, in a move that caused another huge delay, the Trumps claimed that Goldstein had been threatening Trump employees who were potential witnesses. In several instances, the employees signed affidavits stating they had been subjected to abuse by Goldstein, then denied it when they were forced to testify. Even one of the government’s key witnesses, Thomas Miranda—who told the government the Trumps instructed managers to flag applications from minorities and that he was afraid the family would physically harm him—suddenly announced that prosecutors had threatened him and that he had never provided any evidence against the Trumps.
    These allegations of misconduct, which demanded sanctions against the government for abusing its power, required more hearings. Once again, the Trump claims went nowhere.
    In June 1975, more than 18 months after the government filed the case and with the Trumps still withholding potentially relevant records, the two sides struck a settlement. The agreement—which, like all civil settlements, did not contain an admission of guilt—compelled the Trumps to comply with federal housing regulations against discrimination, adopt specific policies to advance that goal, to notify the community that apartments would be rented to anyone, regardless of race, and meet other requirements.

    The Trumps ignored these requirements and still refused to rent apartments to minorities, something the government proved by sending African-Americans and non-Hispanic Caucasians to pose as applicants. The government brought another complaint against the Trumps in 1978, who then agreed to a new settlement.
    In that case, the government had the financial wherewithal to fight back against abuses of the courts and the discovery process by the Trump family. But many private litigants, who have to spend their own money and hire their own lawyers, have been ground down by Trump’s litigation-as-warfare-without-rules approach.

    COURTS ARE LOATH to impose sanctions when litigants fail to comply with discovery demands; in order to hurry cases along, judges frequently issue new orders setting deadlines and requirements on parties that fail to produce documents. But Trump and his companies did get sanctioned for lying about the existence of a crucial document to avoid losing a suit.

    In 2009, a group of plaintiffs claimed Trump duped them into buying apartments in a Fort Lauderdale, Florida, development by portraying it as one of his projects. The fine print of the dense and legalistic purchase contracts, however, revealed that Trump had agreed only to license his name to the developers, and when the project hit financial snags, he walked away from it.
    In their initial disclosures in 2011, Trump and his company said they had no insurance to cover any of their liability in this case. That was important because an insurance policy lets the plaintiffs calculate how much money a defendant can pay in a settlement without suffering any direct financial consequences. In other words, that insurance lets the plaintiff know how aggressively to pursue a settlement, knowing the defendant will have some losses covered by the policy.

    At the time, a settlement in the then-prominent case could have been disastrous for Trump; he faced an array of similar lawsuits because he had licensed his name to developers around the world for projects that later collapsed. In each case, Trump had marketed the developments as his own, a claim contradicted by the sales contracts. A settlement in any of these cases might have encouraged other people who had lost deposits in a Trump-marketed development to file lawsuits against him.
    Two years after denying that Trump had insurance that could have been used to settle the Fort Lauderdale litigation, one of his lawyers made a startling admission: Trump and his company had been insured all along for up to $5 million. But no more—the policy had recently “dried up,” the lawyer said. Stunned, the apartment buyers filed a motion seeking sanctions against Trump and his company, arguing that the case “may very well have settled long ago had the plaintiffs been provided with the policy in a timely manner,” according to a court filing.

    Alan Garten, General Counsel at the Trump Organization for the past decade, said that at the time of the original disclosure, the company’s lawyers did not believe that the policy covered any potential liability in the lawsuit, which he said was an error on his part. “This solely fell on me, and if anyone is to blame for that, it’s me,’’ he said. “It was completely an innocent oversight. And it was my innocent oversight.’’ Garten said the other cases in this article preceded his time at the company and he did not know the facts surrounding them. In the Ft. Lauderdale case, Federal Judge Kathleen Williams ruled in favor of the plaintiffs and ordered Trump to pay limited  legal fees for failing to disclose the policy, then held in reserve the possibility of imposing additional sanctions. The case subsequently settled.

    PERHAPS THE WORST LEGAL CASE involving Trump and his companies hiding and destroying emails and other records involved real estate developer Cordish Cos., which, through an affiliate called Power Plant Entertainment LLC, built two American Indian casinos in Florida. In January 2005, Trump Hotels and Casino Resorts sued in a state court almost immediately after the opening of the casinos, which both operate under the Hard Rock brand. In his lawsuit, Trump claimed that the companies had unlawfully conspired with one of his former associates to cheat him out of the deal; he argued that the projects should be turned over to him.

    Negotiations with the tribe and construction of the casinos had taken many years, raising the possibility that the state’s four-year statute of limitations had passed before Trump finally got around to filing his lawsuit. If Power Plant could prove Trump knew in early 2000 that his former associate was working on the Hard Rock deal, the case would be thrown out of court. The clock here for the statute of limitations starts ticking down when plaintiffs learn they have been swindled.
    Trump claimed he learned about the deal in January 2001, about the time of the groundbreaking and more than three years before he filed suit. However, the defendants contended he had been informed of the projects in 1999. Trump offered no evidence in support of his contention except his word, so the opposing lawyers filed extensive discovery demands, seeking emails, computer files, calendars and other records that might prove he knew about the casino deal before 2000.
    A full year into the case, Trump and his company, Trump Hotels, had produced only a single box of documents, many of which were not relevant—and no emails, digital files, phone records, calendars or even documents Trump lawyers had promised to turn over. Interrogatories were still unanswered. Lawyers for Power Plant obtained a court order compelling Trump and his company to comply with the discovery demands and hand over the relevant information and documents.

    In a March 2006 response, Trump’s lawyers argued that the emails and other electronic documents had not been produced because the company didn’t have them. They claimed it had no servers until 2001—the year Trump claimed he had learned of the Power Plant project. They also claimed Trump Hotels had no policy regarding retaining documents until 2003. In other words, they hadn’t turned over any emails because no emails had been saved on a Trump server.
    Judge Jeffrey Streitfeld reacted with near disbelief. "I don't have the patience for this," he said. "This has been going on too long to have to listen—and I don't mean to be disrespectful—to this double-talk. There has to be an attitude adjustment from the plaintiff."

    Streitfeld ordered Trump executives to file sworn statements attesting to how their email systems had worked from 1996 onward. In response, Trump Hotels filed an affidavit from one of its information technology managers stating that it had had no servers prior to 2001.
    That was false and by deposing numerous IT specialists with two Trump companies—the Trump Organization and Trump Hotels—lawyers for Power Plant gradually chipped away at it. Finally, during a deposition nine months after he had signed the deceptive affidavit, the same Trump executive admitted his assertions in it were untrue. In fact, an IBM Domino server for emails and other files had been installed in 1999, the same year witnesses for Power Plant contended that Trump had learned of the casino deal. Prior to that, as early as 1997, the Trump corporations used servers off-site operated by a company called Jersey Cape, according to sworn testimony by one of the Trump IT experts; the following year, the Trump Organization and Trump Hotels moved to another email provider, Technology 21.

    These startling revelations changed nothing, however, because there was no trove of documents. The Trump records had been destroyed. Despite knowing back in 2001 that Trump might want to file a lawsuit, his companies had deleted emails and other records without checking if they might be evidence in his case. Beginning around 2003, the company wiped clear the data from everyone’s computers every year. Lawyers for Trump Hotels had never sent out the usual communication issued during litigation instructing employees to stop destroying records that might be related to this case. The deletions continued, and backup tapes were reused—thus erasing the data they held. Power Plant lawyers also discovered that after the lawsuit was filed, Trump Hotels disposed of a key witness’s computer without preserving the data on it.

    DATA FROM EVERYONE’S COMPUTERS AT TRUMP’S COMPANY WAS WIPED CLEAR EVERY YEAR.

    In subsequent filings, Power Plant maintained that Trump Hotels had intentionally deceived the court in its March 2006 filing when it claimed it had located no emails relevant to the case because, at that point, it had not yet conducted any searches of its computer system. Trump Hotels executives did not instruct their IT department to examine backup computer tapes until 2007, and even then the job wasn’t done, depositions show. And when computer specialists finally attempted to electronically locate any relevant documents that had survived the flurry of deletions, the procedures were absurdly inadequate. While looking for relevant documents, the technology team was told to use only two search terms—the name of the tribe and the last name of the former Trump associate. So even if there was an email that stated, “Donald Trump learned the full details of the Hard Rock casino deal in Florida in 1999,” it would not have been found by this search.
    With all this proof that Trump Hotels had ignored every court order and filed false documents, Power Plant asked the judge either to impose sanctions or allow its own expert to search for relevant digital records. Trump Hotels argued it had done nothing improper, although its lawyers acknowledged having made some mistakes.  Still, Streitfeld ordered Trump Hotels to make its servers and computer systems available for inspection by a computer forensics consulting firm. That review showed there was no digital data in the computers, servers or backup tapes prior to January 2001—the very month Trump claimed to have learned of the Florida casino deal.

    With the likelihood of sanctions growing, Trump Hotels dropped the suit a few months later, in part because of the company’s financial troubles. A company involved in the Power Plant case agreed to purchase one of Trump’s struggling casinos in Atlantic City, New Jersey, and included as part of the deal a requirement that the litigation be ended.
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