New York Court Gives Trump Org The Death Penalty

// Last night, Donald Trump’s company got the financial death penalty in the New York Attorney General’s civil fraud case.

Justice Arthur Engoron granted partial summary judgment to the state, finding the former president, his two eldest sons, his eponymous company, several Trump Organization executives, and multiple related business entities liable for persistent fraudulent acts. His order cancels the LLCs for each of the corporate entities and directs that the companies be put into receivership and dissolved.

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Or as Trump himself put it, “The widespread, radical attack against me, my family, and my supporters has now devolved to new, un-American depths, at the hands of a DERANGED New York State Judge, doing the bidding of a completely biased and corrupt ‘Prosecutor,’ Letitia James, who ran for office based on a ‘GET TRUMP’ platform, before even knowing anything about me.” There was, of course, much more as Trump engaged in an extended scream therapy session on social media, raging over “Democrat Political Lawfare, and a Witch Hunt at a level never seen before,” while demanding that “some Appellate Court, whether Federal or State, must reverse this horrible, un-American decision.”

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So far no one has ridden to the rescue.

Trump’s persistent habit of submitting false financial statement to lenders was never seriously in dispute. From exaggerating the square footage of his New York apartment by 200 percent, to telling lenders that a property appraised for $16.5 million was worth $73 million, to claiming that illiquid assets were cash, Trump’s statements of net worth were an amalgam of vibes, chutzpah, and whatever banks needed to hear to put the deal through. As the court noted:

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 In defendants’ world: rent regulated apartments are worth the same as unregulated apartments; restricted land is worth the same as unrestricted land; restrictions can evaporate into thin air; a disclaimer by one party casting responsibility on another party exonerates the other party’s lies; the Attorney General of the State of New York does not have capacity to sue or standing to sue (never mind all those cases where the Attorney General has sued successfully) under a statute expressly designed to provide that right; all illegal acts are untimely if they stem from one untimely act, and square footage subjective.

That is a fantasy world, not the real world

There was no real argument for Trump’s lawyers to make, so instead they invented a theory that New York’s sweeping business law does not empower the AG to bring such an enforcement action, particularly in the absence of “actual harm” to one the lenders who gave him credit based on the fraudulent financial statements. This was nonsense on its face: NY Executive Law § 63(12) very clearly empowers the AG to do just that. And as Justice Engoron noted, there was very real harm to the credibility of the market, the borrowers who didn’t get the loans got, and to the lenders themselves who forewent increased interest based on Trump’s false representations of his own creditworthiness:

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The subject loans made the banks lots of money; but the fraudulent SFCs cost the banks lots of money. The less collateral for a loan, the riskier it is, and a first principal of loan accounting is that as risk rises, so do interest rates. Thus, accurate SFs would have allowed the lenders to make even more money than they did.

Trump’s lawyers’ conduct in this case was egregious enough to merit its own post. But in short, they had no good legal arguments, so they made terrible, mendacious ones over and over again even after the court warned them to stop.

And now the former president and his children are repeating this pattern of mendacity, attempting to reduce the court’s ruling to a joke about a judge so stupid he valued Trump’s Mar-a-Lago club at $18 million.

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The real estate circles in Florida are laughing at this foolishness. https://t.co/c8AEZlsa48

— Eric Trump (@EricTrump) September 26, 2023

“As an example, this Democrat Operative valued Mar-a-Lago, the most spectacular and valuable property in Palm Beach, Florida, to be worth as low as $18 Million, when in actuality, it could be worth almost 100 times that amount,” Trump howled. “He hated everything about me at a level that I have never seen before, even beyond the hatred of that displayed by Letitia James.”

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In fact, Trump himself valued the property in the tens of millions when he successfully contested the Palm Beach County Assessor’s valuation in an effort to decrease his tax liability.  The court simply compared the county’s 2011-2021 estimate that the market value of Mar-a-Lago ranged from $18 million $27.6 million with Donald Trump’s representations to banks that the property was worth between $426 and $612 million. He even had the chutzpah to take a conservation easement on the property, a “business loss” which decreased his overall tax liability but which he omitted to mention on his financial statements, giving lenders the impression that the property was eligible for future development (one of his favorite tricks). And as a cherry on top, Trump tried to get the court to accept as an expert a real estate broker who speculated that he would have no trouble finding a buy for the property at $1.5 billion dollars.

The court seemed more inclined to credit Trump’s deposition testimony that any price he put down would be correct because he could “find a buyer from Saudi Arabia” to pay it. As Justice Engoron noted in a wry footnote, “This may suggest influence buying more than savvy investing.”

And so now, unless the appeals court bails him out, we’re going to find out exactly how much these properties are worth when they go on the market.

Maybe Jared Kushner will step up to the plate to bail out his wife’s family — he’s got a couple billion dollars of Saudi Arabian cash rattling around his pocket, right?

Liz Dye lives in Baltimore where she writes about law and politics and appears on the Opening Arguments podcast.

Topics

Courts, Donald Trump, Fraud, New York