The Trump Hush Money Case and the Business Practices Exception to the Federal Felon Gun Ban

Former President Donald Trump’s conviction last week in New York state court on 34 felony counts of falsifying business records dominated news coverage and led to a number of major questions regarding his election prospects, ability to vote, and the likelihood of a carceral sentence.  At first glance, the verdict seems to prohibit the former president from possessing firearms under New York, Florida, and federal law regardless of the punishment ultimately imposed (felon bans typically use the maximum penalty that could be imposed as the basis for disqualification).  As described in more detail in our series on Presidential Firearms, Trump has at various times stated that he owns a number of guns that he would now be barred from possessing due to his conviction.[1]

However, the business-related nature of the felony counts on which Trump was convicted might lead one to question whether Trump qualifies for a carveout in federal law.  The federal felon dispossession statute applies to anyone “who has been convicted in any court of [] a crime punishable by imprisonment for a term exceeding one year.”  While many experts expect the judge in Trump’s New York case to impose a probationary sentence, the former president could hypothetically be sentenced to up to four years in prison per count—comfortably within the federal statute as a matter of arithmetic.  But the definitions section of 922 (specifically, 18 U.S.C. § 921(a)(20)) excludes “any Federal or State offense[] pertaining to antitrust violations, unfair trade practices, restraints of trade, or other similar offenses relating to the regulation of business practices” from the definition of “crime punishable by imprisonment for a term exceeding one year” (emphasis added).

Thus, there is a legitimate statutory interpretation question about whether Trump’s conviction disqualifies him from possessing guns at the federal level.[2]  The carveouts for certain antitrust and business-related convictions in 921(a)(20) date from the Gun Control Act of 1968, although the provision was re-codified and amended in 1986.[3]  The exclusion could be important for Trump, though another avenue would be to pursue rights restoration under New York law.[4]  If that process were successful, Trump would also recover his rights federally because 922(g)(1) excludes "[a]ny conviction which has been expunged, or set aside or for which a person has been pardoned or has had civil rights restored . . . ."

Some courts have taken a relatively broad view of the business practices exception.  For example, an Alabama district judge held in 1992 that a conviction for fraudulently rolling back odometers on cars sold to consumers fell within the exception, such that the defendant was not barred from possessing guns under federal law.  McLemore consulted “the legislative history of the Truth in Mileage Act of 1986” and relied on Congress’ desire “to protect consumers from the annual $2 billion cost to car buyers who overpaid for cars due to the cars’ understated mileage.”  The judge found that the statute of conviction was meant to protect consumers and thus qualified as an “unfair trade practices” restriction under the definitional carveout.  Federal appellate courts, however, have generally construed the carveout narrowly to apply only where the statute of conviction requires proof of anti-competitive behavior or an injury to consumers as an element of the crime.  For example, courts have held that convictions for (1) circumventing federal meat inspection requirements and distributing adulterated meat, (2) falsifying a customs declaration, and (3) mail fraud and conspiracy to commit mail fraud in relation to a construction project, all fell outside the exclusion.

In the meat distribution case, the Eighth Circuit ultimately found that “the primary purpose of the [Federal Meat Inspection Act] is to protect public health and that the elements of [the] FMIA offenses of conviction do not involve an economic effect on competition or consumers.”  Regardless of outcome, all courts to assess the business practices exception tend to conduct a detailed investigation into legislative history to confirm whether the statute of conviction was motivated by competitive or consumer protection concerns (as opposed to public safety or other motivations).

Perhaps the most on-point judicial decision for Trump’s situation dates from 2018.  A federal district judge in D.C. ruled in Reyes v. Sessions that an individual convicted of various corporate and securities crimes who served 18 months in prison and paid a hefty fine was entitled to possess guns pursuant to 921(a)(20), notwithstanding his felony convictions.  Reyes was convicted of “(1) securities fraud and making false filings with the Securities and Exchange Commission . . . (2) falsifying corporate books and records . . . ; and (3) making false statements to auditors . . . ” (emphasis added).  The convictions stemmed from a scheme in which Reyes back-dated stock options provided to employees and improperly failed to record those options as compensation in the company’s books and records. 

The court noted that circuits disagreed over how to construe the business practices exception, with some excluding only offenses where the government would have to prove as an element of the offense some competitive harm or consumer injury, and others using a holistic approach that relied more heavily on legislative history and context.  Reyes rejected the “elements” test and instead held that “an offense relating to the regulation of business practices qualifies under the business practices exception if an examination of either its primary purpose or the elements of the violation reveals that the offense statute is designed primarily to address economic harm to consumers or competition.”  The court ultimately determined that the federal securities regulation framework under which Reyes was convicted, including recordkeeping requirements, was motivated primarily by a desire “to protect investors from economic harm.”  This consumer focus, the judge held, was sufficient to bring the convictions within the scope of the exclusion even though the offenses did not require “the government to prove as an element of the offense direct harm to competition or consumers.”

Especially in light of Reyes, the application of 921(a)(20) to Trump’s New York conviction is something of an open question.  Much may turn on the legislative history of the specific New York criminal statute under which Trump was convicted: Falsifying business records in the first degree (§ 175.10).  The provision dates from 1967, when New York state enacted a new penal code that then-Governor Nelson Rockefeller described as “the first major and comprehensive revision of the [state’s] Penal Law since 1881.”  According to a contemporary commentator, the 1967 code removed “archaic provisions of the former law,” shifted certain offenses out of the penal code into separate regulatory frameworks, and streamlined and simplified the statutory language.  The fact that § 175.10 was enacted as part of a broad revision of state criminal law complicates the legislative history inquiry.  However, New York case law provides at least some guidance.  A 1993 trial court decision notes that, by committing the crime of falsifying business records, the defendant bank executives had “defraud[ed] both [] regulators . . . and subsequently [] the depositors who put their money in branches.”  In 2006, New York’s highest court evaluated the legal sufficiency of evidence for a conviction under the falsifying business records statute in People v. Bloomfield.[5]  The court found that “[i]t is clear that the Legislature, in enacting section 175.00 et seq., intended to protect outsiders, as well as insiders, from fraudulent falsification of an enterprise’s records.” 

Under the broad approach endorsed in Reyes, these decisions could support the idea that § 175.10 was intended—at least in part—to address economic harm to consumers or competitors of the business whose records are falsified.  Moreover, as Reyes notes, some of the earlier case law addressing the business practices exception pre-dates the 1986 amendment to remove the provision allowing the Secretary of the Treasury to designate specific additional excluded crimes.  And a narrow reading of the business practices exception might have been more appropriate when that permissive section was still in place.  It’s worth noting, of course, that Trump faces felony charges in three additional ongoing cases and that none of those charges appear to fall under the business practices exclusion (even broadly construed).