Another Legal Loss for Donald Trump (Stay Tuned for More)
Yesterday was a harbinger of things to come. In a legal defeat for the former president, Donald Trump was found liable for fraud relating to misstating the value of his businesses in New York. The ruling in a civil case is not a criminal conviction but marks one of the first times that Trump has been held legally accountable for his actions.
Yesterday’s ruling involves a civil lawsuit brought by New York Attorney General Letitia James. The suit alleged that Trump misrepresented the value of his real estate holdings in order to deceive banks, insurers, and other entities and exaggerated his net worth by as much as $3.6 billion between 2011 and 2021 for the purpose of securing loans and making other deals. New York Supreme Court Justice Judge Arthur Engoron agreed with the state.
“This is a fantasy world, not the real world,” Engoron wrote in his decision, saying that Trump’s accounting relied on “bogus arguments” that ignored basic accounting rules.
Among the fraudulent claims cited were documents that stated that The Former Guy’s Trump Tower apartment residence was three times its actual size and valuations that overstated Mar-a-Lago’s worth by 2,000 percent, notes CNBC.
This case was decided quickly. The case was set to go to trial on October 2, but James filed a motion in August asking for an immediate verdict per PBS Newshour. A hearing on the motion was held on September 22 and the judge ruled in her favor four days later. The bottom line here is that the evidence against Trump was so strong that a full trial on the question was not needed.
Per the Wall Street Journal, the full extent of the ruling is not yet known, but it also affects his sons, Eric and Don Jr. The verdict has already included the cancellation of the Trump Organization’s right to do business in New York, but James is also seeking $250 million in punitive judgments. The ruling also sanctioned several Trump lawyers $7,500 each for engaging in frivolous legal tactics.
The judge said that the Trump Organization’s business certificates were being canceled because the Trumps and the company “have continued to disseminate false and misleading information while conducting business” in the state.
The October trial will continue on other issues, including allegations of insurance fraud, but the date may change due to a pending lawsuit that Trump has filed against the judge.
Of course, this isn’t the first time that Trump has lost in court and been held legally accountable for his actions. It was only last spring that a jury found that Trump sexually abused and defamed E. Jean Carroll. Carroll is now suing again after Trump made more libelous statements about her after his first loss.
It won’t the be last time either. As is well known by now, Trump has been the target of four criminal indictments, two of which are federal.
The New York case contains many of the elements that we’ve come to know and loathe about Donald Trump. There is blatant dishonesty, a tendency to assume that he is above the law, legal shenanigans, and an arrogance that is unparalleled.
Trump and his lawyers should learn from the New York case and avoid its mistakes in the criminal cases where the stakes are much higher than a $250 million fine. If Trump loses those cases, the 77-year-old may well spend the rest of his life in prison.
The first lesson is that judges don’t appreciate delay tactics and frivolous antics. Steve Berman wrote yesterday in the Racket News that Russia’s Ukraine strategy seems to be attempting to forestall a near-term defeat in the hope that Republicans can aid Vladimir Putin by cutting off military aid. I think Steve is right.
I also think that something similar is happening in Trump’s legal strategy. The Former Guy is pinning his hopes on a Hail Mary in which he not only wins the Republican nomination but returns to the White House. As president, Trump would be positioned to scuttle the federal cases and possibly even pardon himself.
The state cases in New York and Georgia would be a different matter. Presidents can’t issue pardons for state crimes (and neither can Brian Kemp in Georgia by the way). But Trump might be able to delay those cases until he leaves office and Alvin Bragg’s Manhattan case is pretty weak anyway.
Trump and his team must also realize that the facts are against them in at least several of the other pending cases. Drawing out the process might delay his ultimate accountability, but it’s unlikely he will be able to run the table and avoid a guilty verdict on all counts.
The smart play would be to heed the warning from New York and look to settle some of the most serious criminal cases with a plea deal. At this point, prosecutors would probably still accept such an arrangement, especially considering the effect that a trial would have on the country, but the window for such a deal is closing, and as the E. Jean Carroll cases illustrate, Trump seems incapable of learning from his mistakes.
There seems to be no sign that Trump is considering a deal. The former president’s response to yesterday’s ruling was to attack the system and Letitia James on Truth Social. The screed, with better spelling and punctuation than most of Trump’s posts, is an unhinged rant that concludes with the statement, “If they can do this to me, they can do this to YOU [emphasis in the original]!”
Well, yes, Mr. Trump. But you have the point backward.
In the United States, we are supposed to be guaranteed equal protection under the law. If Joe Schmuckatelli, Average American (to use my high school civics teacher, Coach Blackburn’s, classic example; Coach Blackburn was an exception to the rule about coaches not being good teachers in academic courses), would be prosecuted for fraud, corruption, and/or seditious activity, then it is right and proper for politicians, even former presidents, to be prosecuted for the same crimes. Trump’s indictments are an indication that the system is working (albeit slowly), not that it is corrupt.
Mr. Trump does not understand this. In his mind, and in the minds of many of his supporters, politicians are untouchable. Especially if they are Republican.
I’m sorry but that notion sounds swampy to me.
And as for Trump’s idea that “some Appellate Court, whether Federal or State, must reverse this horrible, un-American decision” and come to his rescue because he’s the victim of “Democrat Political Lawfare and a Witch Hunt at a level never seen before,” I think that Judge Engoron put it best:
“This is a fantasy world, not the real world.”
I’m also reminded of WWII German General Erwin Rommel’s critique of Hitler’s (although I hate to invoke the name) defensive strategies as wolkenkuckucksheim or “Cloud Cuckoo Land.” Cloud Cuckoo Land is not a good place to be when your life and freedom depend on sane, rational, measured responses.
For Donald Trump, the cuckoos are coming home to roost.
I assume the whole punishment thing — loss of business licenses, receivership, liquidation — is subject to appeal. No one sane is going to start trying to unravel the rats’ nest of LLCs any time soon.Report
This is terrifying. $18 million is the price set by a judge on a property bought for a reported deal forty years ago for $20 million? The property is now famous. Real estate professionals in Florida put the price between $200 and $750 million. An undeveloped plot near to the 500 member golf resort that’s only worth $18 million is listed for $150 million. The banks and their appraisers continued on with uncoerced business. Everyone involved but the judge and local tax assessors (as a former real estate agent I can tell you that tax assessment and worth are almost never in agreement) agree that this property is worth more than – as I saw someone put it online – 36 Hunter Biden paintings.
Go ahead and get Trump if you have the goods, but the Mara Lago estimate, an embarrassing strain on credibility, ain’t it.Report
The Mar-a-Lago part of Engoron’s ruling:
“Donald Trump purchased Mar-a-Lago in 1985. In 1993, he sought, and obtained, permission from the Town of Palm Beach to turn the property into a social club (NYSCEF Doc. No. 900), and on August 10, 1993, he entered into a ‘Declaration of Use Agreement’ by which he agreed ‘the use of Land shall be for a private social club’ and that ‘[a]ny additional uses of the Land shall be subject to approval by the applicable governmental authority including but not limited to the Town Council of the Town. the Landmarks Preservation Commission of the Town, the Architectural Review Commission of the Town, Palm Beach County, the State of Florida, the United States Government, and/or any agencies under the foregoing governmental authorities.’ NYSCEF Doc. No. 915.
“In 1995, Donald Trump signed a ‘Deed of Conservation and Preservation Easement’ in which he gave up his right to use Mar-a-Lago for any purpose other than as a social club (the ‘1995 Deed’). NYSCEF Doc. No. 901. In 2002, Donald Trump signed a ‘Deed of Development Rights.’ NYSCEF Doc. No. 902. As part of granting a conversation easement to the National Trust for Historic Preservation, Donald Trump agreed that ‘Trump intend[s] to forever extinguish [his] right to develop or use the Property for any purpose other than club use’ (the ‘2002 Deed’). The 2002 Deed also specifically ‘limits changes to the Property including, without limitation, the division or subdivision of the Property for any purpose, including use as single family homes, the interior renovation of the mansion, which may be necessary and desirable for the sale of the Property as a single family residential estate, the construction of new buildings and the obstruction of open vistas.’ Id. In exchange for granting the easement, Mar-a- Lago was taxed at a significantly lower rate (the club rate) than it otherwise would have been (the private home rate). NYSCEF Doc. No. 903.
“From 2011-2021, the Palm Beach County Assessor appraised the market value of Mar-a-Lago at
between $18 million and $27.6 million. NYSCEF Doc. No. 905.
“Notwithstanding, the SFCs’ values do not reflect these land use restrictions. Donald Trump’s SFs for 2011-2021 value Mar-a-Lago at between $426,529,614 million and $612,110,496, an overvaluation of at least 2,300%, compared to the assessor’s appraisal. NYSCEF Doc. Nos. 769-779.
“In an attempt to rebut the OAG’s demonstration, defendants rely on the opinion affidavit of Lawrence Mons, who they purport is ‘the most accomplished and knowledgeable ultra-high net worth real estate broker in Palm Beach, Florida.’ Moens claims that ‘the SOFC were and are appropriate and indeed conservative.’ NYSCEF Doc. No. 1292 at 35-36 (emphasis added). The Mons’ affidavit states in a conclusory fashion that because he believes ‘this unique property offers to an elite purchaser the unparalleled opportunity to own an exclusive and extensive family compound in the most desirable sections of Palm Beach… the valuations in the SOFC were reasonable and below my estimate for the market value of the property each year.’ NYSCEF Doc. No. 1435. Moreover, Moens opines that “[i]f Mar-A-Lago was available for sale, I am confident that in short order, I would be in a position to produce a ready, willing and able buyer who would have interest in securing the property for their personal use as a residence, or even, their own club.’ Id. at 29. Critically, Moens does not opine at what price he is ‘confident’ he could find a buyer (although he opines separately, without relying on any objective evidence, that he believes that as of 2023 the property is worth $1.51 billion?).
“It is well-settled that: ‘where the expert’s ultimate assertions are speculative or unsupported by any evidentiary foundation, however, the opinion should be given no probative force and is insufficient to withstand summary judgment.’ Diaz v New York Downtown Hosp., 99 NY2d 542, 544 (2002); see also Gardner v Ethier, 173 AD2d 1002, 1003-4 (3d Dept 1991) (‘the expert affidavit is also inadmissible because it is conclusory and the views are apparently based to a great extent on hearsay statements from unspecified witnesses as well as upon speculations on the part of the expert’). Accordingly, defendants’ reliance on the Moens affidavit is unpersuasive and certainly insufficient to rebut OAG’s prima face case.
“Defendants further imply that they may ignore the plain language of the 2002 Deed restrictions because they would likely be able to use the Florida judicial system to get out of their contractual requirements; they further assert that because they may successfully breach their contract in the future, they were not required to consider the restrictions of the 2002 Deed when valuing the property. NYSCEF Doc. 1292 at 48-51. This argument is wholly without merit. At the time in which the defendants submitted the SFs, the restrictions were in effect, and any valuations represented to third-parties must have incorporated those restrictions; failure to do so is fraud. Assets values that disregard applicable legal restrictions are by definition materially false and misleading.”
“Accordingly, OAG has demonstrated liability for the false valuation of Mar-a-Lago as appears in
the SFCs from 2014-2021.”
From pgs. 25 to 27 of: https://www.nytimes.com/interactive/2023/09/26/us/trump-judges-ruling.htmlReport
Don’t go spoiling everybody’s fun like that.Report
This wasn’t “experts can disagree on which numbers to use”.
The reason the Judge didn’t give it to the jury was because Trump’s legal team admitted that they were making numbers up that had no origin in reality and using them on legal documents.
Their defense were claims that had no basis in law that the judge felt were so far out there that he warned them and then sanctioned them.
There wasn’t any disagreement on the facts, which apparently included that Trump was breaking the law.Report
Only the experts do disagree on the numbers. The banks have appraisers that were consulted. Did they commit fraud too?Report
Like most banks, I suspect they relied on Trump to be honest. That makes them laughably silly but not necessarily guilty of fraud.
This is what the fraud claim rests on. Trump and his organization made what the judge determined where unsubstantiated claims of value far in excess of the county’s valuation. The AG didn’t sue the banks either. so a reasonable and prudent person would conclude that the AG believes they did not violate the law.
More practically I have to ask why you are so hot to defend a guy whose own lawyers admit in statements as officers of the court that their client committed fraud?Report
My bank didn’t rely on me to be honest.
I had to provide a proctology report.Report
The banks determined on their own what the value was and moved forward. They didn’t rely on Trumps numbers, so who was defrauded?Report
So your real issue is you don’t see a victim here and thus no need for the AG to have brought the suit? That’s great, but also pointless. Mar-A-Lago is but one of Trump’s many profits, and the NY AG sued because she believed he had committed frau din New York -meaning the taxpayers had been defrauded but his and his company’s accounting tricks. That Mar-A-Lago is corporately held (like all his residences) is why we are here.
But again – why are you working so hard to defend TFG?Report
This isn’t working so hard. Offering a property for more than it’s worth, for sale or as collateral (which is pretty much the same thing in most cases) is not fraud. The buyer did due diligence. Done.
If he committed other wrongs, why taint them by bundling prosecution with something that is obviously not wrong and part of almost every transaction involving real estate where the seller didn’t get list or the tax evaluation differs from sale or list?Report
Dude, saying a building with 10,000 square feet of space has 30,000 square feet of space is unambiguous fraud and that’s merely the worst example. There’s no way to spin that with “experts disagree on things” a buildings gross living area is not something experts disagree on.Report
Then Trump’s lawyers were laughably bad to agree experts do agree with the numbers and to admit their client lied about those numbers, i.e. engaged in fraud.Report
Based on your experience as a real estate agent, is it possible that a 200-acre plot of land with strict and immutable development restrictions could be worth less than a neighboring 20-acre plot of similar attractiveness that can be zoned to build five mansions?Report
Nothing is immutable, but of course. Neighboring list prices would be only one, and behind neighboring sales price, of the many, including restrictions, bits of information that that bank’s appraisers used to come to the decision that the property was adequate collateral.
The restrictions were likely way down on the list. With undeveloped comparable properties in the area it would be odd for someone who wanted anything but a golf resort to buy an existing golf resort to tear down and incur all those extra costs. If anything, the restrictions merely state that this thing you are buying must remain this thing that you are buying. That wasn’t a secret to the buyers, appraisers, other involved parties, or even hidden from commenters on this thread. Finding comps for a 500 member turnkey golf course near a tourist destination and business hub with an international airport nearby isn’t something I’ve attempted to do, but if you can find one for $18 million, start putting together investors.Report