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Home » The Trump fraud case highlights the use of a broad law in novel ways to target Trump and only Trump

The Trump fraud case highlights the use of a broad law in novel ways to target Trump and only Trump

The New Neo Posted on by

Andrew C. McCarthy is no Trump fan, but he certainly recognizes prosecutorial and judicial overreach when he sees it:

The ruling by a New York State judge on Tuesday, putting Trump out of business in the Big Apple, the longtime center of his real-estate empire, illustrates two things.

First, to what will be the surprise of absolutely no one, Trump has a strained relationship with the truth. Put less charitably, he lies. …

Second, while the civil law, like the criminal law, makes fraud illegal, the New York State statute at issue in Judge Arthur F. Engoron’s 35-page ruling is nightmarishly broad and draconian.

Executive Law 65(12) outlaws engaging in “repeated” and “persistent” fraud in business dealings. Well, okay, but if one engaged in such an egregious pattern of behavior, surely we’d expect to find some victims, right? At least one victim? I mean, if you’re going to incinerate a multibillion-dollar international conglomerate, shouldn’t there be, you know, a bank that lost, if not millions in depositor savings, at least a few bucks? Especially if, as in James’s case, at issue are more than a dozen years of financial dealings.

But here: There’s no victim. No harm to any creditor or investor. No bank or insurance company brought in to say, “Donald Trump ruined us … or at least profoundly damaged us … or maybe, you know, shaved a few shekels off some middle-manager’s annual bonus.”

A case obviously brought against Trump in order to destroy him, a case that involves facts that indicate it would not be brought against anyone else. Pure political revenge, and transparently so.

McCarthy adds:

In tone and substance, [the opinion of the judge expresses] real venom. I was a prosecutor for many years, so I can’t say I’ve never seen such overt judicial loathing of a defendant and/or his counsel. But on those rare occasions, one usually finds sociopathic defendants who’ve committed heinous crimes, or lawyers whose tactics skirt the lines of suborning perjury and the like. Here, there is nothing like that. There is just … Trump. …

Putting aside the lack of harm, Engoron and James are not just stripping Trump of his earnings. They are putting him out of business. Not just him but his two adult sons, some other Trump Organization executives, and the Trump Organization, including the array of entities operating under its umbrella. Without proof of any crime or any damage, New York State is imposing the corporate death penalty.

McCarthy makes a very interesting point at the end of his piece:

Whatever you think of Donald Trump, the existential punishment is wildly out of proportion with the negligible harm. For a non-crime, in which no one suffered harm — in which misrepresentations were made not to saps but to sophisticated financial actors who do their own due diligence on valuations — progressive Democrats are closing down a long-established business of a man who, before he became their political enemy, was celebrated as an iconic New York real estate broker.

This raises two questions: First, how many businesses would emerge unscathed, under the law as New York interprets it, from the kind of examination Trump endured due only to unabashed partisanship? Second, why conduct business in New York if progressive bullies reserve the right to annihilate you over trifles?

In other words, this case could have a chilling effect on business investment in New York. It certainly should, for anyone paying attention. My guess, though, is that most Democrats would think this is only ever going to happen to Trump or his supporters, and that’s perfectly fine because they deserve that and worse. Those Democrats think the crocodile will never circle back to eat them.

Trump’s lawyers say they will fight this:

According to Trump’s lawyer Alina Habba, Trump intends to appeal the judge’s “fundamentally flawed” ruling immediately. Trump might also ask for an immediate trial suspension.

I hope it is granted, but if the appeals court is as biased as the trial court, it won’t be.

More:

The decision effectively barred New York-based businesses controlled by prominent members of the Trump Organization from conducting business in the state by removing their company certificates.

According to Engoron, the decision to revoke business certificates affects any company controlled or owned by Trump, his sons Donald, Jr. and Eric, and former employees of the Trump Organization Allen Weisselberg and Jeffrey McConney.

That would spell the end of operations for renowned Trump properties, including the Midtown Manhattan-based Trump Tower, the Westchester County-based Trump National Golf Club, and the 927-foot-tall Wall Street office building known as The Trump Building.

Together, the companies provide jobs for hundreds of individuals and account for a sizeable chunk of the holdings of the Trump Organization.

These holdings are all in New York; the court has no power over holdings in other jurisdictions. Again, I wonder how many people will stop investing in New York and will go elsewhere. My reply to McCarthy’s question, “how many businesses would emerge unscathed, under the law as New York interprets it, from the kind of examination Trump endured?” would be “Virtually none.”

Comments

The Trump fraud case highlights the use of a broad law in novel ways to target Trump and only Trump — 40 Comments

  1. Infuriating. So much so, I’m not going to read the post. Just the headline is enough. Sorry, neo. And thanks. You’re doing the Lord’s work.

  2. Trump has a strained relationship with the truth. Put less charitably, he lies

    And that is significant how? Name me a successful high level politician or CEO that hasn’t “lied”. This seems needlessly petty. Its only purpose might be to underscore that McCarthy is “no Trump fan” as you pointed out, thus perhaps giving the rest of his argument more weight. But I think pointing out that Trump “lies” actually takes away from the rest of his well researched and articulated argument.

  4. Nonapod:

    It’s not significant, and McCarthy acknowledges that it doesn’t matter in this case except that it gives the prosecutor and judge a tiny hook to hang the entire case on. McCarthy realizes it is common practice and his question towards the end indicates he knows that people will not or should not do business in NY anymore if this sort of case can be brought for mere lying that doesn’t hurt anyone and that is common practice.

  5. This is a taking without due process. If even McCarthy, who despises Trump, can see this is purely a political maneuver, it needs to be stopped. As he points out, there are no banks or creditors who allege they were defrauded.

  8. So what happens to the real estate in New York that Trump owns???? Do the employees get to collect their last check ? What happens to third parties who have money due from Trump inc for recent services and supplies? Who pays the last electric bill? Is NY going to move illegals into Trump real estate?

  9. Clearly they’ve decided to cut down the law to get after the devil.

    Nobody can objectively say what a property is worth if it hasn’t changed hands–and even then reasonable people can disagree, or we could never say that someone “overpaid” or “got a deal”.

    If any big business in New York has any reason to fear the same thing being used against them, expect the State of New York to find a way to reassure them.

    It’s a bit like Trudeau’s overreach in Canada, when people lost confidence in the banking system because of what he was doing to the truckers.

  14. This is the height of insanity! How can this stand in a just legal system? It makes me actually sick to my stomach. It means we are all at the mercy of these rabid legal vultures. If the appeal is denied, what then? Madness!!

  15. Those who cut down the law render themselves equally unsafe.

    “Once a rabies infection is established, there’s no effective treatment.” Mayo Clinic

    Which is why there’s only one ‘cure’ for rabid dogs.

  16. Geoffrey-
    “Those who cut down the law render themselves equally unsafe.”
    I wish I could agree with you, but our current condition renders that void. Behold, the Biden Crime clan! Not one of them has been “scathed”.

  17. Neo: “… In other words, this case could have a chilling effect on business investment in New York. It certainly should, for anyone paying attention.”

    Masterful understatement there.

  18. “Trump has a strained relationship with the truth. Put less charitably, he lies. …”

    I sat watching the news in which the major networks hosted Adam Schiff for years telling us that there was incontrovertible evidence of Trump engaging in crimes. Very early on I detected that he was lying, and I proposed the solution to his lying was for the networks to deny him any further time on their broadcasts.

    The Mueller report finally emerged and verified that my beliefs that Adam Schiff was lying were true.

    Did the networks stop hosting the confirmed liar Adam Schiff? No. Now he is pursuing higher office, and I still see him lying on TV again. The man is a disgrace, but the network executives are even more disgraceful.

    Erronius

  21. Is there a point at which the left’s vendetta against President Trump becomes so absurd that Americans will take notice, or has a form of mass psychosis so gripped the country that truth is no longer recognizable?

    It’s as if a veil is descending over America.

  22. This will have no impact on business in New York. The only impact on business is to tell them to keep their heads down and say “Well, we’re not Trump so we’re fine”
    And increase donations to the Dems. To the people who watch the mainstream news the charges and the judge’s actions are normal. They have no idea how bent out shape the law to go after Trump is.

  23. Which is why we should ALL stand for Trump, because HE is the only one fighting this. WHERE are the feckless Republicans?? If they can do this to Trump, imagine what they can do to you.

  24. wendybar:

    What do you mean by “stand for Trump”? I’m outraged by this lawfare against him and I write about it very often, which I certainly consider to be not just “standing for Trump” but also (and more generally) standing for a fair legal system. But none of that means that (1) that Trump would be the best candidate in the general; and (2) that other candidates haven’t condemned the lawfare against Trump as well. I’ve written about that before, with quotes. Both Vivek and DeSantis have condemned it. I don’t know about the others, but those two have.

  25. Good God! I read the judge’s decision and it is mean and nasty. Let’s also give credit where credit is due: the judge didn’t write it, some clerk did, (but I’m willing to bet the judge added the footnote referencing the Marx Brothers film.) And the millennials seems to have decided that “truthiness” is good enough.

    It’s just pages and pages of venom. If a single person wrote that, they’d’ve been sporting blood pressure through the roof!

    It is a great swath city through the law to get Trump.

    As I’m reading the ad nauseum harangue in the decision any the valuations of the property, I keep thinking of my own experience.

    I worked for a large non-profit in California that owned about 500 acres. Now in California, “tax exempt” means very little and we had to pay proper tax on that 500 acres. It was encumbered and none of it could be sold off* for any of they use. But by God! Our property taxes were valued as of were had 500 acres of prime commercial property! (* However, when PG&E needed five acres for something, the paid is $1000 an acre, and that was deemed fair compensation because the encumbrances limited how it the land could be used.)

  27. – Nominating Trump would give the left exactly what it wants.

    – Trump’s lies are not insubstantial. You don’t need a market valuation to measure square footage, and he overstated the square footage of his real estate by 200%. His softer valuations were off by orders of magnitude. Maybe that’s how “everybody does it” in the commercial real estate business, but that doesn’t make it an honest or honorable way to do business.

    – Trump’s lies are part of the genius of Democrats’ dirty tricks against Trump, in general and for this one in particular. It takes a degree of sophistication to know that reliance and damages are elements of fraud, and that something very fishy is happening here in a circumstance where all of the payments were made on the loans and the banks didn’t lose a dime. On the other hand “Trump lied to the banks so he could get loans” is simple and easy to understand. It also happens to be true.

    – Relying on Trump in the political area is kind of like sending a soldier to charge no man’s land wearing a day-glo jumpsuit and a rainbow feathered hat.

    – Trump’s best hope of getting this particular situation remedied is to get into Federal Court. Maybe there is some kind of constitutional argument against NY’s civil fraud statute that doesn’t require damages or reliance. Or maybe a majority of NY’s highest court will doubt that this “Trump-specific” rule can be limited to Trump. Sadly, though, I think there’s a good chance that he loses this one in the long run. (And my sorrow is for the future of the justice system, not for Trump.)

  28. I might be naive—sure—but would the exaggerations have to be shown to be material to getting the loans in question? IOW, could he have gotten the loans without exaggerating?

    Presumably, the loans are going to be paid back mostly by whatever it is the applicant does with them–business expansion, so forth. Which seems to have been the case here. Except that it might be possible to show that existing business revenues were sufficient without any or substantial additional revenues from the new project(s). If that were the case, the exaggerations were immaterial.

    In some cases, paying the bank’s interest would net out less than the reduction in profits if you used your own money. IOW, I can pay X% on a bank loan, or lose more than that by using my own money, depending on what I’m doing with it and what it’s netting me now..

  29. The famous quote attributed to Thomas More or to the playwright Robert Bolt applies well enough to a monarchy. What ministers could get away with under one monarchy could come back to hurt them under another. It also applies pretty well to a working representative democracy. It’s less clear that it applies to ideological-bureaucratic regimes, especially if they last long enough that the original perpetrators are no longer on the scene.

    If you control the major institutions of society enough to stay in power and can demonize your opponents and make the public hate them, you have less to worry about than Thomas More did. In this case, I don’t think Trump ever was the vindictive monster that his opponents believe he is, and another Republican who might be elected some day also probably wouldn’t have the stones to do what the Democrats are doing now.
    ___________

    It looks like Trump did overvalue his properties, if Mar-a-Lago is a typical example. But just what is the right valuation? The judge says 18 million. Leticia James says 27.5 million. Those numbers would seem to me to be quite low considering that Trump bought the property in 1985 for 10 million and has put in improvements and made it profitable since then. City and county appraisals have varied from 18 milion to 27.6 million to 37 million, but real estate tax appraisals usually are less than what a property would bring on the open market.

    Forbes Magazine estimated the market value at 325 million — though they may regret that now for political reasons. The Trump Organization valued the property at between 426 and 612 millions, not totally out of line with the Forbes estimates. Recently Trump has made claims of over a billion, which seems to be far too high, but so far as I know, that number wasn’t claimed by the organization earlier. It makes for good headlines now though.

    I’m curious about whether the Trump Organization used independent appraisers, or just guessed at the valuations. If they’re guessing it’s natural to guess high. That seems to be the practice throughout the business. “Honest and honorable” does not apply much in today’s America, least of all in politics and government.

  30. “…he overstated the square footage of his real estate by 200%.”– Bauxite

    Do you have a link to this? Is this just the real estate in NYC, or his worldwide holdings?

    As to the left’s motivations for their persecution of President Trump, there is another explanation that better fits what’s happening– they fear another Trump presidency. At some point there will/may be a tipping point where average Americans recognize the lives were better under President Trump than the dysfunction the Democrat left is pushing.

    As to President Trump’s exaggerations about his net worth, this reminds me of the arguments concerning his claims of being worth $10 billion during the 2016 election. Should he now be put in prison for defrauding the American people– when his actual net worth was closer to $2-3 billion? How is that any different than what is happening today?

  31. this is a criminal abuse of legal authority, I’d vote for any of the top three, but this exercise shows how close we are to the dissolution of the Republic, are there somethings I wish he didn’t say, probably, how does that balance against a planned demolition of the rule of law, that up to 10 senators enabled, not merely
    Garland but cop killer fan Kristen Clarke and Lisa Monaco,

  32. Brian E and Abraxas – It’s all in the McCarthy article that neo linked, including the square footage overestimation and the reason that the Mar-a-Lago valuation was off. These are not small differences or insignificant puffery.

    From neo’s McCarthy link:

    “Engoron finds that, between 2014 and 2021, Trump and his co-defendants overvalued assets by between $812 million and $2.2 billion. And some of the whoppers are jaw-dropping. Trump overstated the 10,996 square feet of his Trump Tower apartment as 30,000 square feet — a 200% inflation that had him pegging its worth as $327 million, at a time when the highest sale for a comparable New York luxury triplex on record was $88 million. A Westchester golf club, appraised over the years at no more (and usually much less) than $56.6 million, was valued in Trump’s SFCs at between $261 million and $291 million — a mark-up of more than 400%. At his Aberdeen property, the Scottish authorities gave him authorization to develop 500 residential homes; Trump’s SFCs listed the number as 2,035, overstating value by £164 million. And so on.

    In railing over Engoron’s ruling, Trump and his defenders ridicule the court’s valuation of his prime Palm Beach property, Mar-a-Lago, at a mere $18 million. But — and I know this will shock you — Trump’s account is misleading. The comparatively low value (actually, between $18 million and $27.6 million, computed by objective appraisers, not Engoron) is owed to Mar-a-Lago’s being encumbered by severe use restrictions — e.g., Trump agreed it would be a club, not fully developed beachfront residences.

    This won him valuable tax breaks but drastically limited Mar-a-Lago’s market value. Trump knew the objectively appraised value, yet listed Mar-a-Lago on his SFCs at between $425.5 million and $612 million. Though Trump presented an expert who dubiously speculated that the property could be worth $1.5 billion, the law required properties to be valued in accordance with their known restrictions. Engoron is not saying Mar-a-Lago, if sold free and clear, is worth only $18 million; he is saying that Trump inflated what it was worth under existing encumbrances by 2,300%.”

  34. Bauxite, your TDS is showing.

    The values stated in the article may or may not be accurate. The judge is saying they weren’t accurate. Okay, show us where the lenders were harmed.

    Fraud – “Fraud is an intentionally deceptive action designed to provide the perpetrator with an unlawful gain or to deny a right to a victim.”

    Where is the victim in this case???? Did the lenders not do their due diligence in examining the property values? What the judge is saying is that the lenders were wrong (either stupidly or carelessly) to lend money to the Trump organization even though they never lost a dime. There is no wrongdoing.

    You may consider inflating one’s estimates of their net worth as a bad thing, but it’s not a CRIME!! Oh, unless some AG and partisan judge decide to make it a crime.

    You’re letting your hatred of Trump bias your judgement about this case.

    I have dabbled in real; estate investing over the years. Most lenders want at least two appraisals of property that you want to borrow money on. And I never got to pick the appraisers. My loans were mere pittances compared to the Trump organization. Yet, the lenders did their due diligence. If they don’t do so, they will soon have a portfolio of bad loans and be out of business.

    Had Trump stiffed a lender, the lender would have gone after him in court as the AG is now doing. That didn’t happen. Get it through your head – there is no crime involved in this case. It’s a fictitious case made up by partisan legal beagles. It should rightly put all of us, you included, in fear of such a perverted justice system.

  37. Bauxite, the problem with McCarthy’s analysis (and often Turley’s, come to think of it) when describing the various lawsuits and criminal charges against President Trump is that they have some basis in reality.

    We have entered the non-reality phase of the country, where an exaggeration=lie=fraud. A man can have a vagina. A woman can have a penis, etc., etc., etc. The left has so twisted accepted definitions of so much of our language as to make the Humpty Dumpty blush.

    This deserves scorn, not anything approaching how McCarthy writes about the case.

    As to the 200% figure, according to what McCarthy wrote Trump overstated the size of his apartment closer to 300%.

    By the way, has anyone asked President Trump how he could claim his apartment was 30,000 sq ft?

    How many years has President Trump overstated the valuations of his properties? 20 years? 30 years? 40 years? Why are they attempting to put him out of business now?

    President Trump could have ridden off the world stage and would have probably been left alone. Thankfully he’s had the courage to highlight the utter corruption of our political system. We are seeing first-hand the corruption in our electoral system, corruption in our political system, and corruption in our legal system.

  38. Pingback:Links and Comments | Rockport Conservatives

  40. It’s time for Republican prosecutors and judges to step up charges against all liberals.

    We are not in the good old days of a constitutional republic, and need to act accordingly.

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