Delay OK'd On Some Docs In NY AG's Trump Property Probe

Law360 (September 30, 2020, 8:10 PM EDT) -- An attorney who formerly worked with the Trump Organization can delay producing documents in the New York attorney general's probe into whether President Donald Trump inflated his asset values as privilege issues are argued, a state court said Wednesday.

New York Supreme Court Judge Arthur Engoron said land-use lawyer Charles Martabano has until noon Monday to produce documents that he and the Trump Organization assert are privileged in New York Attorney General Letitia James' probe into actions surrounding a Trump property in Westchester County. Judge Engoron had previously ordered Martabano to produce all documents related to a subpoena by James by Friday.

Judge Engoron ordered the stay Wednesday in an order instructing James to show why the Trump Organization and Martabano should not be allowed to reargue his Sept. 23 holding that Martabano had waived privilege by failing to produce an adequate privilege log in James' probe. Earlier Wednesday, Martabano and the Trump Organization asked to reargue Judge Engoron's holding, asserting that Martabano could not waive privilege on behalf of the Trump Organization. 

"Indeed, this court's determination that [the Trump Organization's] privilege can be waived by its former attorney's preparation of a deficient privilege log is unprecedented in New York," Martabano and the organization said in their motion.

Fabien Levy, a representative of James' office, declined to comment on the judge's order beyond saying the office would file additional documents later in the week.

James, in a Wednesday filing made before Judge Engoron's order, slammed the request for reargument by Martabano and the Trump Organization as untimely. Martabano and the Trump Organization had "ample opportunity to prevent the waiver of these privilege assertions and did not do so," James said, asserting that the delay by Martabano and the Trump Organization in presenting their arguments was "a last-minute attempt to further delay compliance."

James added that even if the documents requested under the subpoena are privileged, the Trump Organization could "claw back" the privileged documents.

In contrast, any delay in the documents would harm James' office by impeding its investigation, James said. Judge Engoron's new deadline for Martabano to provide the documents to the court coincides with the deposition of Trump's son Eric Trump scheduled for Monday, according to James' filing.

"Any delay in the Oct. 2 production deadline will burden the attorney general by requiring that Mr. Trump be examined more than once in order to permit reasonable investigation of all potentially pertinent information," James said.

James asked the court in August to compel the Trump Organization, Morgan Lewis & Bockius LLP, Eric Trump and others to supply information in response to a civil probe that includes whether the president or the Trump Organization artificially inflated the value of assets for tax and other benefits. That includes whether they inflated the value of Seven Springs Estate, an approximately 212-acre property in Westchester County, to claim a $21.1 million tax deduction in 2015.

Those subpoenaed by James' office had told the court they're looking to preserve attorney-client and other privileges, while James' office has said they've made overbroad privilege objections.

Martabano, who worked with the Trump Organization in the potential development of the Seven Springs property starting about 2011, previously asked the court to deny the office's request to compel him to produce additional documents and to be further deposed.

The Trump Organization and counsel for Eric Trump and Martabano did not respond to requests for comment.

New York is represented by Attorney General Letitia James and by Matthew Colangelo, Colleen K. Faherty, Alex Finkelstein, Eric R. Haren, Louis M. Solomon and Austin Thompson of the Office of the New York State Attorney General.

The Trump Organization Inc., DJT Holdings LLC, DJT Holdings Managing Member LLC and Seven Springs LLC are represented by Sanford Jay Hausler, Lawrence S. Rosen, David N. Kittredge and Amy D. Carlin of LaRocca Hornik Rosen & Greenberg LLP.

Eric Trump is represented by Alan Samuel Futerfas of the Law Offices of Alan S. Futerfas and by Marc Lee Mukasey of Mukasey Frenchman & Sklaroff LLP.

Charles Martabano is represented by George J. Calcagnini.

Morgan Lewis & Bockius LLP is represented by Timothy J. Stephens of Morgan Lewis.

Sheri Dillon is represented by Graeme Webster Bush of Zuckerman Spaeder LLP.

The case is New York v. The Trump Organization et al., case number 451685/2020, in the New York State Supreme Court, New York County.

--Additional reporting by James Nani and Paul Williams. Editing by Neil Cohen.

For a reprint of this article, please contact reprints@law360.com.

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