Thoughts on Judge Engoron's Opinion, A Response to Calabresi

A different take.

There's a lot going on in my friend and co-blogger Steve Calabresi's post below about Judge Engoron's ruling in the civil case brought against Donald Trump and his business entities.  I don't want to respond to all of it.  And I don't have a particular view of whether it was wise for the New York Attorney General to bring the case.  But I'm also not sure of what specifically is legally reversible about Judge Engoron's ruling.

I want to start with a big-picture idea that Steve raises, which I have seen widely repeated, that the case against Trump is illegitimate because Trump's actions were (as Steve puts it) "a victimless crime."  On this thinking, the banks that lent money to Trump weren't harmed by Trump's lies. Maybe lies are just how rough-and-tumble New Yorkers do business. As Steve claims, "is apparently standard practice in the New York State real estate market where borrowers often overstate the value of their assets." And if the banks that gave him loans had their loans repaid, what is the harm?

In thinking about this question, I think it helps to say a bit about the New York law at issue. Here's my understanding (and I hope readers will correct me if I'm wrong). Under New York law, you need to register businesses with the state. The registration is effectively a license to do business.  And one of the state Attorney General's 16 statutory duties is to bring an action in equity against businesses that "engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business."  The action in equity asks for injunctive relief, "enjoining the continuance of such business activity or of any fraudulent or illegal acts, directing restitution and damages and, in an appropriate case, cancelling any [business] certificate filed[.]"

Should it matter that the particular lies that were the premise for the Attorney General's action involved lies in obtaining loans that were successfully repaid?  The basic idea, I take it, is akin to when a state suspends a driver's license for drunk driving.  The state has granted the person a driver's license, premised on the idea that the person will drive reasonably safely.  But when a person has been shown to drive dangerously, the state will come in and revoke the license.  Critically, that's true even if the person who drove drunk made it home safely on that particular trip.

We can imagine a person who drove drunk but didn't crash might think it unfair to revoke their license.  It's a victimless crime, they might say; no one was hurt that night. But I gather we are accustomed to the idea that it's the established risk of harm, not actual harm, that is the plausible reason to withdraw the license.  A person might have somehow made it home safely last night, but perhaps it's not a bad idea to take away the keys for a bit so they don't engage in that same risky conduct again tomorrow night.

The case against Trump and his business entities, I take it, was sort of a business equivalent of that.  Trump and his business associates were engaged in so much lying, and so much fraud, the Judge concludes.  And their credibility on the stand was, as the Judge puts it, severely compromised.   They were able to repay the loans, true, but they wouldn't have gotten the loans without the lies.  And they reaped massive profits from lying, Judge Engoron concludes, as they were able to make deals they wouldn't have been able to make, and at rates they wouldn't have been able to get, had they been truthful.  Acting as chancellor in equity, Judge Engeron requires Trump and the businesses to give up their ill-gotten gains,  says Trump can't run a New York business for three years, and imposes other equitable remedies.

Steve repeatedly claims that this law has never been used "that way." I'm not sure what "that way" means.  But based on a quick Westlaw search, I do see opinions about other equitable enforcement actions that Attorney General Letitia James brought under this law against other businesses.  In just the last few months, for example, opionions include People by James v. Richmond Capital Group LLC, 80 Misc.3d 1213(A) (N.Y. 2023) (enforcement action against loan sharks, ordering a long list of equitable remedies including canceling contracts); People by James v. Mashinsky, 79 Misc.3d 1237(A) (N.Y. 2023) (refusing to dismiss action brought by James against CEO of crypto company based on alleged scheme to defraud investors by inducing them, through false and misleading statements, to deposit their digital assets with his now-bankrupt company);  James v. Scores, 79 Misc.3d 1118 (N.Y. 2023) (enjoining towing company from engaging in predatory towing practices).

As I said up at the top, I don't have a particular view of whether AG James should have brought this case in the first place.  I also don't like the state intervening and preventing someone from doing business in the state, especially when everyone is on notice that he's not truthful.  So if the opinion is wrong, and gets reversed, I certainly don't mind that. But with the state having brought the case, it's also not obvious to me what particular part of Judge Engoron's 92-page ruling is legally wrong.  Anyway, I'm not an expert in this New York law, and if readers or others have specific portions they take issue with, I'd be very interested to hear it. Just cite the page or pages with the error and explain the problem, and I'm very interested to hear about those particular objections.

Comments

[Z Crazy]

Here's a thought.

Deutsche Bank has a bigger legal department that the New York attorney general, a department that doesn't have to worry about prosecuting gang members or drug dealers or kiddie porners. If there was even a probable case for fraud, wouldn't they have taken the lead?

[Orin S. Kerr]

I had understood the evidence at trial to be that Deutsche Bank didn't realize the extent of Trump's lies until the state of New York brought the enforcement action that revealed them.

[Vryedni]

A large global business might also find it prudent not to sue a former and maybe future U.S. President.

[Dr. Ed 2]

A state highly dependent on Federal funds might find it prudent for the same reasons. Fort Drum comes to immediate mind...

[ReaderY]

In tin-boat banana republics, things like this happen all the time. People are scared shitless of offending the Leader. In countries where people are accustomed to a government with liberty and justice and rule of law, however, people demand otherwise and won’t put up with this shit.

[Nige]

But in the US being Leader doesn't put you above the law forever.

[Dr. Ed 2]

Well, it happened to Massachusetts in 1973.
Massachusetts was the only state to vote against Nixon and he retaliated, closing the Charlestown Navy Yard, the Watertown Armory, and a whole bunch of other defense related facilities.

And look at what Brandon just did with LNG exports in Texas.
That wasn't retaliation?

[David Nieporent]

Anyone want to take a guess on whether Dr. Ed's factual assertions here are accurate? I'll give you three tries — and "yes" doesn't count as one.

[Dr. Ed 2]

DO SOME FUCKING RESEARCH, PENIS BREATH.

JUST A SCINTILLA OF RESEARCH WOULD SUFFICE.

Even half a scintilla would....

[David Nieporent]

Okay, so you just watched ET for the first time. What'd you think?

[Absaroka]

I dunno, Ed. According to wiki Watertown article "In 1968 the Army ceased operations at the arsenal...".

Tricky Dick was inaugurated in 1969.

The Navy Yard was closed on Nixon's watch. I didn't find anything saying it was retaliation, but it's possible. OTOH, Navy Yards had been closing for several years, e.g. Brooklyn in the mid 60's, and the Watertown closure isn't giving me a lot of confidence in your memory.

[David Nieporent]

OTOH, Navy Yards had been closing for several years,

The Vietnam War had just been wound down. It's hardly surprising that we'd be closing various bases.

[Absaroka]

"The Vietnam War had just been wound down. It’s hardly surprising that we’d be closing various bases"

I dunno. The Boston Yard was founded in 1801, so it had survived a lot of wars ending. And Brooklyn was closed in 1966, which doesn't comport with VN winding down. There is a Nov. 27, 1964 NYT article about Robert Strange McNamara deciding to close a lot of Navy bases (not including Boston).

I'd expect an Atlantic Navy Yard to have more to do with the Cold War than VN. If I were making a wild guess, I'd wonder if Boston growing in around it wasn't a big factor. I read another NYT article about Brooklyn closing, and my sense was that the city was ecstatic to have the land for development, as opposed to unhappy about losing the Yard. I didn't see any articles about why Boston closed, or angst over it.

[Randal]

New York isn't highly dependent on federal funds. It's a mommy state.

Texas is a suckling state.

[M L]

New York and the financial sector derives its profit off the backs of every productive business and citizen across the country. Without the rest of America they are nothing.

[David Nieporent]

I like how Trumpkins start their Marxist rhetoric when cornered.

[Randal]

I know, right? I'm not sure I would trust the defense of capitalism to the left but ok, we can try it.

[M L]

There's nothing Marxist about noting that the US is very productive and profitable across industries and sectors (due to its capitalism), and that the financial sector intersects with all others, and with consumers at the individual level across the country, and depends on and benefits from their profitability (while providing mutual benefits). And, that the arrangement of free interstate commerce is integral to the US economy, especially for a sector of such a nature. The financial sector and New York City is profitable because of their role historically and currently as a central hub to the US as a whole. Without that relationship to the US as a whole they would not be what they are.

[Randal]

Ok, so your comment was simply a complete non-sequitur? Ok. I agree.

[Sarcastr0]

What a weak-ass attempt to retcon saying 'off the backs of.'

[NvEric]

"Trump's lies" ?
Besides marking you as inherently hostile, aka, a TDS candidate, and biased, your very words mark you as unreliable and lacking in knowledge of what you are purporting to explain here.

Steve may have been over the top, however, you certainly need not compete in a race past him. Being smarmy is a Gore trait.

[Orin S. Kerr]

I'd be interested to know if you have read the judicial decision we are discussing.

[bacchys]

Your use of "TDS" shows you're a MAGAt.

[Not Applicable]

You're use of "MAGAt" proves you have TDS.

[Nige]

'Being smarmy is a Gore trait.'

This is how you lot see people who are generally right about things and don't lie.

[JasonT20]

I wonder if Trump fans know the origins of using “Derangement Syndrome” in political arguments. It actually goes back more than 20 years to a time when Charles Krauthammer referred to Bush Derangement Syndrome for people that irrationally opposed George W Bush and his policies. Of course, liberals remembered this and used it against conservatives later. They often accused conservatives of having Obama Derangement Syndrome. There they may have had a point, as there was a great deal of irrationality in opposition to Obama, particularly in how conspiracy theories factored into it.

There certainly is a great deal of personal disgust at the root of opposition to Trump. A fact that I have no qualms admitting is a factor for me. I maintain that I also have plenty of rational motivation to oppose him, but my dislike and disgust is absolutely there.

Ultimately, whether we believe that someone we are arguing with is motivated by irrational hatred of a politician is irrelevant to the arguments we could make in favor of our own position. It can feel good to point out how irrational our opponents are or how obvious their own biases are distorting their thinking. It isn’t easy to resist a good comeback, and I’ve consciously given in to that temptation many times. We should just always be aware that doing so is satisfying our own emotional desires and will not persuade anyone of anything.

[Riva]

Yes that sounds reasonable. Deutsche bank, at this level, just basically a subprime lender rubber stamping everything. I wonder, if the target in this case had not been Donald Trump, if certain in the legal profession might raise an eyebrow or two on nearly half billion dollars in fines and interest in an unprecedented proceeding (quite literally) against a stated political target?

[Darwinnie]

The guy can and will just pay this. The difficulty will be the ban on New York, and I do not know how that will work out. Maybe it’s in receivership or something for three years. But if I’ve learned anything from watching white-collar fraud cases over the years, this won’t affect Trump much at all. Really, $400M is not that much money at Trump’s level. His hate-spewing objections is just aimed at getting people who like him angry at his political opponents real or made-up, I think.

[David Nieporent]

Maybe it’s in receivership or something for three years.

Engoron has appointed a monitor — former federal judge Barbara Jones — to oversee the operations of the Trump Organization. But it is not being dissolved, and only Trump and his two adult (chronologically) sons are banned from running it. Ivanka, for example, could do so.

The major hurdle is that the Trump corporate entities that were sued are enjoined for three years from applying for any loans from any financial institutions chartered in NY. Given the sanctions on Russia because of the Ukraine invasion, it may be rather difficult for these organizations to obtain financing for their operations.

[Dr. Ed 2]

By the time this is over, I think there will be multiple suits for failure to meet fiduciary duty. I'm not so sure it is impossible to *borrow* from Russia, particularly if there are third party banks involved.

Remember that the sanctions involve investing in Russia, not borrowing from it, with the exception of two banks.

But there is lots of other money elsewhere, and not all US banks are chartered in NY. Many are, which is why I think this could turn into an anti-trust action, but many aren't.

[Darwinnie]

Thank you for posting reason.

[rloquitur]

One of the reasons the case is BS. Parties negotiate over real estate valuation, not for its own sake, but for the terms of the deal, which the credit committees (a) know that valuation is a negotiation and (b) know precisely how much dili was conducted. And Trump had the right to rely on this practice.

[David Nieporent]

I'm going to have to make a macro for this: this case was not about disagreements about valuation. It was about undisputed lies by Trump.

[Randal]

Do people negotiate the square footage?

[bernard11]

There were no real negotiations about the value of the capital. The bank routinely cut the valuation by 50%, which they did as standard practice with developers. This is, I suspect, partly to allow for fudging and partly to give themselves a nice margin of error.

But even this is overstating matters. The bankers testified that they based the loan not on the collateral but on Trump’s personal guarantee, and they took his word for the values of the assets listed in his SFC (Statement of Financial Condition), which values were wildly overstated.

From the decision:

On March 12, 2015, Cushman & Wakefield [an appraisal firm] sent [the Trump Organization] an appraisal of the TNGCLA driving range portion of the property that valued it at $25 million as of December 26, 2014; the appraisal also valued the entire TNGCLA property, before any potential conservation easement, at $107 million.

email communications demonstrate ongoing discussions between Dillon,[the Trump lawyer who worked on appraisals] Weisselberg, and Trump, Jr. about the potential conservation easement on TNGCLA. PX 1412; TT 4142-4146. Notwithstanding, the 2015 supporting data and accompanying SFC valued TNGCLA at over $140 million. …

More:

In October 2012, Dillon, on behalf of the Trump Organization, engaged appraiser Robert Heffernan “to provide a written appraisal… estimating the fair market value of a conservation easement placed on the Client’s property located in the town of New Castle, New York (the‘Seven Springs Estate’) for federal income tax purposes.” PX 908 ; TT 2703-2704. Email correspondence from Heffernan to Dillon demonstrates that as of December 18, 2012, Dillon was aware that Heffernan valued the potential Seven Springs conservation easement over seven mansion lots at $775,000 per raw lot, an estimate that would have valued the entire seven-mansion development at approximately $5.5 million.

Notwithstanding, the SFC backup data for 2013 demonstrates that on August 20, 2013, Eric Trump advised McConney to value the seven-mansion undeveloped plots on the SFC at a staggering $161 million. PX 708. By September 8, 2014, McArdle completed another verbal estimate of the value of the seven-mansion development at Seven Springs, this time valuing it at $14 million. PX 169, 181. Notwithstanding, the SFC backup data for 2014 demonstrates that on September 12, 2014, Eric Trump again advised McConney [Trump Organization Controller] to value the seven-mansion undeveloped plots on the SFC at $161 million.

There is more. RTFD.

[David Nieporent]

There's another problem, which is that there's no private cause of action to enforce Executive Law § 63(12), which means that Deutsche Bank would've had to bring a common law fraud claim and then the issues people mistakenly raise about this lawsuit (that the loans were repaid, primarily) would've been an issue.

[Dr. Ed 2]

And it shouldn't have been, penis breath?

[Theendoftheleft]

Does NY not have a private cause of action for equitable fraud (as opposed to common law fraud), regardless of 63(12)?

If not, why not?

[Social Justice is neither]

Then you're either an idiot or a liar.

[John Rohan]

You understood incorrectly. DB said they did their own assessment, which was much lower than the one given by the Trump org. And they still loaned them money.

[David Bremer]

I suspect for the same reason that I couldn't sue you for negligence if you didn't actually hit me. For a private party to bring a fraud claim, it must establish both fraudulent intent and injury.

In this case, DB would have a difficult time proving injury. Sure, you can say that it would have charged higher interest. But now you have to assume that Trump would have gone forward with the deal (versus getting a loan somewhere else). Plus you'd have to assume that he'd pay back the loan (maybe the economic would have been such that he would have defaulted). You'll also take a business hit, as borrowers may not want to borrow from you if they think you sue to effectively change terms afterward.

That's why the car analogy works well. You have a person who acted in a fraudulent way, but hasn't hurt anyone in a way that they have a claim yet. So the state steps in prevents the person from continuing to engage in unlawful behavior.

[CJColucci]

If you lie to a lender to get a loan you might otherwise not have gotten, or gotten only on stiffer terms, you might get lucky and pay the lender back. In that case, rather than bring a complicated and expensive lawsuit for, essentially, the extra interest the lender might have earned in a deal based on honest numbers, a practical lender will likely pocket the money it got, give thanks for its good luck, and simply not do business with the liar again. So the banks' not suing Trump doesn't make this a "victimless" fraud.

[Dr. Ed 2]

Comparing Donald Trump to loansharks is asinine -- loansharks have real victims...

But if Professor Kerr believes that Donald Trump committed crimes, perhaps he would also explain why Donald Trump isn't entitled to the protections accorded a criminal defendant?

I say again -- Shay's Rebellion was over miscarriages of justice like this.

[Orin S. Kerr]

My understanding is that it's an action brought in equity, not a criminal prosecution. Thus the protections and possible remedies are those that apply in a case brought in equity, not in a criminal prosecution.

[Brett Bellmore]

That's something I don't really understand here.

Aren't civil actions supposed to require that there have been damages? I thought that was central to the very concept.

While the criminal law can punish behavior that does no harm, simply on the basis that the legislature has proscribed it.

I get the impression that the only reason, the solitary reason this IS a civil matter, is to avoid giving defendants the full measure of due process they'd get in a criminal trial. And no other reason.

[Orin S. Kerr]

Brett, no. It's an action in equity.
https://en.wikipedia.org/wiki/Equity_(law)

[Brett Bellmore]

From that Wikipedia page:

"Another distinction is the unavailability of a jury in equity: the judge is the trier of fact."

It's still a civil case, isn't it? And aren't civil trials supposed to be based on some harm having occurred?

And yet, between the 6th and 7th amendments, it seems to me the right to a trial by jury is supposed to be unavoidable outside of truly minor matters. THIS case certainly exceeds that $20 threshold that the Constitution mandates and the courts ignore.

Really, this is looking more and more like some kind of abomination the legal system has created/enlarged specifically to skirt around basic constitutional protections.

Civil forfeiture.
Declaring mistrials if jurors are discovered to know their rights.
Over-charging to force plea bargains in over 90% of criminal cases.
All used to deny people jury trials.

And now we can add "actions in equity" to the list.

[Stephen Lathrop]

Bellmore, the fact that you never heard of equity law, or at least failed to notice it until now, does not mean it is some kind of new and tyrannical imposition. More the opposite. Not new. And anti-tyrannical. At least in principle. To critique an equity case as applied seems like it would be overreach for you, given what you still have to learn.

[Brett Bellmore]

I'll gladly admit that, when I first heard the term, "action in equity", I naively assumed it had something to do with, you know, "equity". The word is right there, after all.

I am now better informed: It actually means, "Screw the 7th amendment."

[LawTalkingGuy]

Oh man. You’re gonna have your mind blown if you ever actually read anything courts have written about the Seventh Amendment.

[Brett Bellmore]

That, "20 threshold that the Constitution mandates and the courts ignore." should suggest that I have, and am appropriately outraged.

[LawTalkingGuy]

No. You haven’t. If you did you’d understand why you just don’t know what you’re talking about and are just making up Brett-Law again.

[Hairy_Reasoner]

One thing to keep in mind is that the 7th Amendment only applies to federal courts, not state courts.

Also, the distinctions of common law and equity existed when the 7th Amendment was drafted and ratified, and the framers went out of their way to explicitly state that the 7th Amendment only applies to common law.

So, the 7th Amendment has no bearing on this case.

[LawTalkingGuy]

Brett,

The law-equity distinction and its implications for jury rights and remedies has been a subject of discussion for over 500 years. That’s not me being hyperbolic: that’s actually how long this has been going on since the formation of the Chancery Court.

[Jeffrey]

I think it is at best an act of legal fiction to call an award of $354 million with no claim of damages by the supposed "victims", an action in equity. Disgorgement of ill gotten gains requires someone to be a victim. For example if the claim is that Trump earned ill gotten gains by receiving lower interest rates than he would have gotten had his financial statements been supposedly more accurate, then there is a victim (the banks) who could have sued for loss of profits. But that didn't happen.

The suspension of his ability to do business in NY (even though no party claimed damages) would be an action in equity. When the award is $354 million I believe its more an action at law vs. an action at equity.

[Sarcastr0]

No, this is not a legal fiction.
No, disgorgement does not require a victim. It is fundamentally about deterrence.
No, just because a bank doesn't sue doesn't mean they weren't screwed.
No, your hot take on what counts as equity has no legal moment.

[Jeffrey]

Explain how you can have ill gotten gains and not have an opposite party or parties that was not denied a portion (and hence was injured) of those gains.

As I noted if you want to argue that Trump earned unjustified income because he overvalued his properties, then there is a party, e.g. the banks, that was injured in an amount equal to those ill gotten gains.

You cannot have an argument that party X has received ill gotten gains (and is subject to disgorgement) and that there is not a party or parties that have been equally damaged to the same degree. It is a mathematical certainty.

[Sarcastr0]

Explain how you can have ill gotten gains and not have an opposite party or parties that was not denied a portion (and hence was injured) of those gains.

They were; they didn't get the interest they should have gotten if the valuation had been passed to the bank rather than Trump lying.
Maybe they wouldn't have made the loan at all.
Again, just because they didn't sue doesn't mean they weren't screwed.

You cannot have an argument that party X has received ill gotten gains (and is subject to disgorgement) and that there is not a party or parties that have been equally damaged to the same degree
This is not true. There are lots of market distortions that do not harm a particularized party, but rather the free market's operations itself. Insider trading is a good example of that.

[Jeffrey]

As to your first point, you are arguing that the banks were denied income/profits because had they been given the "accurate" financials they would have charged Trump a higher interest rate. But the banks never sued Trump over that claim nor did they make that claim at trial. It is risible to argue that huge banks with huge legal staffs wouldn't bring suit for damages in the hundreds of millions if they thought Trump defrauded them for that much money.

As to your second point, to some degree suits over insider trading mimic what NY Executive law 63 (12) was designed for. Cases where there are numerous "small" parties where it might be impractical (although they can always bring a class action suit) for each party to sue to recover relatively small losses. But that's not the case here. There are only a handful of alleged victims and the alleged damages per victim is large.

Even though Trump is a large developer there is no evidence that anything that happened with Trump distorted the market. Regardless, you would still need to show how the market "distortions" resulted in damages of $354 million.

[CJColucci]

Suppose I steal $10,000 in trust funds I'm supposed to be administering for the beneficiary's benefit, take the money to Atlantic City, go to the roulette wheel, put it all on 22, and get paid off 35-to-1. I then replace the stolen funds and kick in a couple of days' interest. (To keep the arithmetic simple, I'll leave the interest out of any further calculations.) No harm, no foul? Absolutely not. My gains are the result of a breach of trust and not only would I have been accountable for the $10,000 loss (plus interest) if 23 had come up, since I got lucky I can be forced to disgorge my ill-gotten gains of $340,000 (again, leaving interest out to simplify) even though had I acted properly there wouldn't have been $340,000 of gains.
This is old, well-established stuff, not a new-fangled F**k Trump rule made up for the occasion.
As for the banks not suing, I addressed that up-thread.

[ducksalad]

CJC, that’s the most convincing argument I’ve seen for why there was a cause for action.

What I haven’t seen is a convincing utility argument for why this type of case does not deserve the protection of a jury. To be clear, I understand that you legal types have constructed some kind of difference between law and equity and have rules that the second doesn’t get a jury. But what is the purpose and benefit of the distinction?

What I’m looking for is something that starts with “The right to a jury is less important in a $345 million dollar equity case than in a $20 regular civil case, because,,,,”

Otherwise I’m inclined to think the distinction was engineered solely to avoid cases where a jury would prove uncooperative.

[ObviouslyNotSpam]

"“You have probably noticed or already read that this case has no jury,” Engoron said. “Neither side asked for one and, in any event, the remedies sought are all equitable in nature, mandating that the trial be a bench trial, one that a judge alone decides.”"

Trump didn't ask for one. (Or, perhaps we should say his crack legal team didn't ask for one.)

[iowantwo]

They were; they didn’t get the interest they should have gotten if the valuation
Contrary to the Testimony of the Bank you claim is injured.
The Bank testified they were very happy with the deal they struck.

[CJColucci]

For some reason, there's no "reply" on ducksalad's comment, so I'm responding here. Any "utility argument" for why equity cases don't have juries would be an after-the-fact rationalization. There might actually be plausible utility arguments, but they aren't the reason equity cases don't have juries.The actual reason is that centuries ago that's how we did things, and so we still do. Nobody thought juries necessary or desirable then, probably because the kinds of questions equity cases decided weren't the kinds of questions people then thought juries would be good at answering -- though advisory juries were sometimes used -- and the type of relief required was not a simple monetary award. Maybe if we were writing on a clean slate we would try equity cases to a jury, but we're not. I can see why a purely historical answer might not be satisfying, but that's the way it is. And this is the way it was for centuries before Donald Trump came along. Whatever else anyone might think about it as an original proposition, none of this is new and none of it should be surprising to people who had reason to know or care.

[Hairy_Reasoner]

I am likewise replying to the most proximate comment to ducksalad's comment asking about why this wasn't a jury trial.

First, the bit about $20, I'm assuming comes from the 7th Amendment to the US Constitution, which only applies to federal courts, not state courts.

Second, this article provides a thorough review of when
section 4101 of the New York Civil Practice Law and Rules (CPLR) allows for a jury trial. This isn't one of them. If further goes on to explain the constitutionality of those rules.

https://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?article=1421&context=lawreview

[David Nieporent]

I am likewise replying to the most proximate comment to ducksalad’s comment asking about why this wasn’t a jury trial.

Just to be clear: Trump never requested a jury trial. Now, it's certainly possible — maybe even likely — that the court would've said no if he did so. But it was 100% guaranteed that he wouldn't get a jury trial if he didn't ask for one.

[ObviouslyNotSpam]

(Now I feel a little silly for saying the same thing, but hey, I replied in the correct place!)

[Randal]

Consider the damage to competing real-estate companies who were truthful and got no or worse loans for it.

[iowantwo]

You honestly believe it is possible to zero in on just ONE variable that goes into setting a loan rate.

[Randal]

No. And that's pretty much James's point.

[theobromophile]

Exactly. It's civil law when they don't want a jury trial and to have to prove intent beyond a reasonable doubt; it's equity when they want to put the business into receivership; it's damages when they want to put the guy in the poor house.

Perhaps those who are trying to all but bankrupt the challenger to the current executive leader ought to keep their noses a bit cleaner than this.

[Sarcastr0]

I will admit that the whole equity thing is not something I picked up on well in law school; maybe it's that I never took remedies.

But from the Bray posts on the VC alone, I am quite sure that it's not some simple institutional avoidance of due process in civil cases.

[LawTalkingGuy]

The commentary on this is just like the commentary on Trump/Jan 6th defendants: the system and principles involved are the same as they always have been, but suddenly it's the greatest injustice of all time.

Commentators and courts have discussed the implications of labels used and nature of the sought when it comes to government civil penalties for forever. There's been a massive amount written on this stuff: should function prevail over form or historical distinctions on the jury trial right? Are some civil remedies or penalties so massive that they are really criminal penalties that require criminal protections? What role do federal courts have in enforcing the civil-criminal distinction in states?

The argument that the law-equity distinction is problematic here isn't even crazy! But suddenly people who never thought about this stuff before (or whatever Calabresi is doing) are like: equity is the greatest injustice to have ever happened ever!

[ducksalad]

Can’t speak for the others here, but I did not realize this way to evade a jury existed. It took a famous case for me to become aware of it.

Laymen like me were taught that we have a right to juries so that arbitrary and capricious judges can’t do huge, harsh things to you without convincing a jury it’s reasonable. Now I’m told that the whole thing can be bypassed by typing “equity” instead of “law” on some form. (I’m sure y’all have better explanation of how the difference isn’t arbitrary, but I’ve haven’t seen it on this blog.)

And conversely, why do I have to blow two days a year on jury duty for lawsuits, if we can just relabel it equity and let me and the other 200 people in each cattle call go home?

[Darwinnie]

Trump didn’t ask for a jury trial. I suspect he didn’t want one, as he knew a jury would find against him. So he takes it on the chin and uses the trial to demonize Dems and make himself the victim. The guy is a master manipulator and con. That’s it.

[hobie]

My understanding is that the lying and fraud gave Trump's companies an unfair competitive advantage in the market place of loans etc. that responsible companies could not enjoy. That is one way the legitimate business community in New York was harmed

[Brett Bellmore]

But again, the banks actually contradicted that, as I recall, saying that they did their own valuations.

How much advantage can you get from a lie that wasn't relied upon?

[Sarcastr0]

As noted in Prof. Kerr's first post in the comments section, that is not actually what the banks said.

[Randal]

The court found ill-gotten gains. That means gains they got because of their frauds. Responsible businesses wouldn't have been able to get those gains. That's an unfair advantage for Trump, which the court is rectifying in equity.

[bernard11]

You recall incorrectly.

They did rely on Trump's Wildly falsified SFC's.

RTFD.

[Social Justice is neither]

What's to understand beyond they're marxists looking to ruin their political opposition by any means necessary so any normal restriction does not apply. They've come out and called it nothing more than a political persecution and still Kerr will support it as long as it assaults his enemies.

[Dr. Ed 2]

I don't think that the STATE should be able to bring actions in equity.

If I recall correctly, there was a great deal of debate in 1787 if Equity actions should even be allowed -- for anyone -- because that was one of the biggest issues they had with King George's Courts. And as it is an action in equity (which I did not realize) that makes having to post the bond to appeal even more outrageous as you have a judge running amuck, doing whatever he damn well pleases -- that's what some of us fought the Revolutionary war over.

[Sarcastr0]

If you recall correctly?

Maybe bring a source for once.

[Dr. Ed 2]

Pay me for research and I'll dig it up.

[Dilan Esper]

Article III would seem to indicate the pro-equity side won the debate.

[Vryedni]

Offensively temperate and well-reasoned.

[Dan Schiavetta]

+1

[Dr. Ed 2]

But wrong.

Just like the Dred Scott case was.

[Vryedni]

[Deleted - wrong location]

[Brett Bellmore]

"They were able to repay the loans, true, but they wouldn't have gotten the loans without the lies. And they reaped massive profits from lying, Judge Engoron concludes, as they were able to make deals they wouldn't have been able to make, and at rates they wouldn't have been able to get, had they been truthful. "

Didn't the banks actually testify that they didn't rely on customers' evaluations of the value of their property, but instead did their own? Rendering all of the above untrue?

[Orin S. Kerr]

No, that is not what Judge Engoron concluded at all. (You might want to go to the opinion and do a search for "relied," Judge Engoron makes lots of findings on this.)

[Brett Bellmore]

I know that's not what he concluded. That's why I said "banks actually testify", not "judge concluded...

I'm saying that the judge may have concluded stuff the supposed victims said weren't true.

Gotta run.

[Randal]

Or that they did testify.

https://www.courthousenews.com/witness-ties-trumps-phony-finance-statements-to-125-million-deutsche-bank-loan/

[Elme30336]

Deutsche Bank’s own valuations of Trump’s assets that proved the bank did, in fact, do its own work before issuing the loan.

The figures showed that Deutsche valued Trump’s properties far more conservatively than Trump did. When applying for the loan, Trump valued Trump Tower in Manhattan at $490 million, while Deutsche put it at just $380.2 million. Trump pegged Niketown as a $263.7 million property, while Deutsche saw it worth $197 million.

So the bank numbers and trumps numbers weren’t that far off. Seems judge only took the states word on things and not the cross examination.

[Noscitur a sociis]

Gotta run.

L, as they say, OL.

[Joe_dallas]

Fwiw - its quite dubious that the banks relied on the fraudulent personal financial statements. I understand thats what one of the bank officers stated, though it remains quite dubious.

The bank is going to do some level of due diligence, cash flow analysis, property valuation, etc. The bank has to satisfy bank examiners, the bank has to satisfy the participating banks, etc.

The bank has its own incentives in the lending process, they may have given rate discounts to attract the debtor. Banks make their money on the interest on the loans,

Its very unlikely that the bank actually relied on the fraudulent financial statements contrary to the testimony of the bank officer.

[Jason Cavanaugh]

Is there some kind of schedule that we can follow along with to know what you're going to pretend to be an expert about on any given day?

[Joe_dallas]

jason - My comments are common knowledge. Of course its obvious that having knowledge of how things work in the real world is taboo in the minds of progressives.

[Joe_dallas]

jsaon - Can you or any expert or non expert point to a single statement that is incorrect?

[Randal]

https://www.courthousenews.com/witness-ties-trumps-phony-finance-statements-to-125-million-deutsche-bank-loan/

[Joe_dallas]

Randal
I am fully aware the prosecutions star witness, the loan risk officer testified that DB relied on the fraudulent SFC to make the loans.

However as I have noted, and as have several others who work in the lending industry, the testimony that the bank relied on the SFC is very dubious.

See the commentary from . rloquitur and DWB63 below. Both of which have considerable expertise in lending. My commentary lines up with the two industry insiders. The loan risk officer's testimony is not very credible given all the other facts.

[Randal]

He testified that Trump got a sweetheart deal based on his putative net worth.

Is it your contention that he's lying and Trump didn't get a sweetheart deal?

Or that Trump deserved the sweetheart deal because DB actually ignored his putative net worth in coming to the decision?

[iowantwo]

The contention is, 2 entities entered into a fully transparent contractual agreement. Both parties fulfilled their contractual obligations. No fraud by either party.

[Joe_dallas]

Randal -
As I stated, I am fully aware of his testimony.

As noted by Rloquitur and DWB63 below, that testimony is not well supported by the underlying facts. in other words, his testimony is dubious.

[Randal]

dwb seems to be on my side, and rloquitur seems to be making things up. Why do you find rloquitur so credible?

[Elme30336]

Also on cross examination he admitted they used their own numbers not trumps.

Deutsche Bank’s own valuations of Trump’s assets that proved the bank did, in fact, do its own work before issuing the loan.

The figures showed that Deutsche valued Trump’s properties far more conservatively than Trump did. When applying for the loan, Trump valued Trump Tower in Manhattan at $490 million, while Deutsche put it at just $380.2 million. Trump pegged Niketown as a $263.7 million property, while Deutsche saw it worth $197 million.

[Legal Genius]

I searched for "relied" in the decision and it appeared exactly zero times.

[Mark]

I just performed the same search and found that the word appears 32 times.

[Randal]

I suspect that the legal "genius" searched for "relide."

[Legal Genius]

That's because I searched for the word but intentionally left the quotation marks around it in my search. You need to read my comments literally. If only Engoron did so with Executive Law 63(12).

[iowantwo]

this is what the bank did to Trumps valuations
"The figures showed that Deutsche valued Trump’s properties far more conservatively than Trump did. When applying for the loan, Trump valued Trump Tower in Manhattan at $490 million, while Deutsche put it at just $380.2 million. Trump pegged Niketown as a $263.7 million property, while Deutsche saw it worth $197 million."

That's a right down of 23.4%

Elsewhere in the linked article the person said they were not concerned with the valuations and honored the Reputation of Trump inc In essence issuing a signature loan, using the one of pieces of property as collateral
This is a contractual agreement between two sharks.
What it is not, is fraud.

Nicholas Haigh was formerly a risk manager at Deutsche Bank, the German lender that issued Trump a $125 million loan 12 years ago. He testified that he allowed Trump to use one of his properties, the Doral Golf Resort and Spa in Miami, as collateral for the loan.

Haigh conceded that it was a rare practice for the bank, but given Trump’s claimed net worth, Deutsche Bank signed off on the loan anyway.

[Davy C]

"When applying for the loan, Trump valued Trump Tower in Manhattan at $490 million, while Deutsche put it at just $380.2 million. Trump pegged Niketown as a $263.7 million property, while Deutsche saw it worth $197 million."

For a $125 million dollar loan? Is there really a significant difference in interest rates if you have buildings worth $783.7 million vs $577.2 million as collateral? Even if the values dropped 75% from the *bank's* valuation, it would still more than cover the loan.

[Elme30336]

I also don’t see how Trump wouldn’t have received the loans period. That’s an assumption the judge seems to go out on a limb on. Had this bank turned him down another would have loaned him the money. I think the judge makes a ton of errors and goes outside the law to assist the state to steal his money.

Seems unconstitutional that the state can steal your property like this. Seems extremely suspect. Especially when both the judge and prosecutor are extreme leftist democrats. They play for the same team. State said Jump judge said how high.

[Karl]

Prof, it's generally a bad idea to respond to Brett. It only encourages him in his fantasy and question begging.

Good response to Steve's weird article though. Really enjoyed it.

[Social Justice is neither]

You mean the judge that predetermined the facts and allowable defense for his predetermined result would never conclude something contradictory to facts, fuck off with that. Next you'll tell me Enron was exonerated by their internal audit.

[ObviouslyNotSpam]

I see you still haven't figured out motion practice. I guess it doesn't make good TV...

[John F. Carr]

I thought the statute of limitations had expired on the loan applications. The allegedly fraudulent statements of financial condition were submitted to reassure the banks that the loan was still going to be repaid.

[Hairy_Reasoner]

From the judgement:

Defendants’ argument [that the banks didn’t rely on the false Statements of Financial Condition] is to no avail, as none of plaintiff’s causes of action requires that it demonstrate reliance. Instead, plaintiff must merely show that defendants intended to commit the fraud.

(see page 75:
https://www.nycourts.gov/LegacyPDFS/press/PDFs/OAGvTrump-PostTrialDecision.pdf )

[santamonica811]

It’s just such a weird argument for a law professor (Calabresi) to make: no victim = no crime. When I taught 5th graders, it's the level of sophistication I would expect, from some of them. I can't imagine giving a passing grade to an actual law student giving this in a crim law or crim procedure class. (It would be fascinating to sit in on his classes, to see if he's this off-the-wall in his actual teaching.) Months ago, I gave a few examples of where Calabresi would say I had committed no crimes.
a. I repeatedly shoot a rifle into a campsite full of 10-20 people who have loud music on. I want to kill them. But I miss each shot. And due to my distance and the loud music, no one there even knows I fired a gun. Calabresi would say, “Yup, no victim, so no crime here.” That's, frankly, just stupid, and stupid on its face.
b. I embezzle a million bucks from a company, and run off to Vegas. I do amazingly well in the casino, and double or triple my money. I go back, and re-deposit all the money back in the company’s account. In fact, I put in a massive extra amount of money. Not only did they not lose money, but my embezzlement has resulted in a big windfall for them, *and* they never found out about my embezzlement until charges are filed against me. Again, Calabresi would say, “No harm at all to the company. In fact, a big benefit. Therefore, no crime at all.”

(And you can change this slightly, so that I’m only being civilly charged, rather than criminally charged, to make it more comparable to Trump's NY case.)

Making the “no harm = no offense” argument seems so silly, so obtuse, that it’s hard to imagine a law professor making it in good faith. Digressing slightly; I feel like I should apologize to both Calabresi and the good professor here, for previously calling Calabresi a moral and intellectual whore. Don’t get me wrong–I think it’s an accurate description. But I could have picked softer words, I think.

I am hoping that Calabresi (assuming that Trump wins in November) gets the federal judgeship or administration job he so clearly is gunning for. I’d hate to think that he sold his reputation and his integrity for nothing.

[Michael P]

Your analogies are not like to what Trump was accused of doing in this case.

A better parallel: Joe Biden intentionally kept highly classified documents that he was not permitted to have, but he returned them eventually. No harm, no foul, right?

[Please, Daivd, Seek Help]

This seems like a good analogy to why harm is a component of either certain laws or prosecutorial discretion to bring charges under certain laws.

I don't understand the manner in which you're deploying it -- if you think harm is an important component of all prosecutions, then it sounds like you agree that Joe Biden should not have been prosecuted. But in your phrasing it sounds like you think he should have been prosecuted and are mad he wasn't. If you think harm is irrelevant to prosecution, then I don't know why you're nitpicking a guy making the argument that you can have harm without victims when you seem to agree. And if you think it's case dependent, then I don't know why you're drawing the analogy between cases as a means to correct someone. And if your broader point is that the law doesn't matter and everything is a rigged political game, I don't know why you're posting a comment to a law professor talking about the law on a law blog.

[ObviouslyNotSpam]

TDS. (It doesn't mean what they think it means.)

[Brett Bellmore]

"Making the “no harm = no offense” argument seems so silly, so obtuse, that it’s hard to imagine a law professor making it in good faith."

I don't know; It would be a silly argument were this a criminal case; Legislatures can get away with outlawing perfectly harmless conduct, they merely have to disapprove of it. "No man's life, liberty or property are safe while the Legislature is in session."

In civil cases, isn't it supposed to be different? The court is supposedly redressing some harm that the defendant caused to the plaintiff? That's why there doesn't have to be a relevant law in a civil case, prohibiting the conduct in question: You're under a common law obligation not to harm those around you!

The present case seems to be some kind of unholy cross between civil and criminal: It's premised on a statutory law, there's no harm that needs to be proved, (Indeed, the supposed victims have testified that they weren't harmed!) and yet you only get the rights inherent in a civil trial.

I can't escape the conclusion that the only reason this is a "civil" offense IS to avoid supplying appropriate due process, that this is just a criminal case wearing civil law like a skinsuit.

And that's apart from the apparent fact that nobody has EVERY had this law applied to them in this fashion, before Trump.

[Nige]

'And that’s apart from the apparent fact that nobody has EVERY had this law applied to them in this fashion, before Trump.'

Nobody ever got caught committing fraud before? I mean, other than Trump. Three times now.

[Brett Bellmore]

"In this fashion"; It wasn't surplusage.

[Nige]

Nobody even pretends Trump didn't do what he was accused of doing, ie, committing fraud.

[Brett Bellmore]

You seem uncommonly fond of claiming that people "aren't even pretending" to do things people are doing in all sincerity right in front of your face. It's like some crazy rhetorical tic.

[Nige]

Oh, so you ARE pretending he didn't falsify financial documents, just like you pretend the university and the charity foundation didn't happen.

[Sarcastr0]

Read the OP, Brett. It's not very long.

Prof. Kerr has citations that directly contradict 'the apparent fact that nobody has EVERY had this law applied to them in this fashion, before Trump.'

[Hairy_Reasoner]

It was the previous summary judgement in September 2023, not this trial, where, “the Court found that plaintiff had capacity and standing to sue; that non-party disclaimers and party “worthless clauses” do not insulate defendants’ material misrepresentations; that intent, scienter, and reliance are not elements of a stand-alone § 63(12) claim; that disgorgement of profits is an available remedy; and that the subject financial statements materially misrepresented the value of the Trump Tower Triplex, The Seven Springs Estate, certain apartments in Trump Park Avenue, 40 Wall Street, Mar-a-Lago, and a golf course in Aberdeen, Scotland. NYSCEF Doc. 1531.”

see: https://www.nycourts.gov/LegacyPDFS/press/PDFs/OAGvTrump-PostTrialDecision.pdf#page=5

[Dr. Ed 2]

" in a crim law or crim procedure class"

THAT'S MY POINT!

Trump should be accorded the protections of a criminal defendant.

[Magister]

Should every defendant in a non-criminal case be accorded the protections of a criminal defendant, or is that just for Trump?

[Dr. Ed 2]

THE STATE SHOULD NOT BE ABLE TO USE CIVIL LAW TO DEFEAT THE PROTECTIONS OF CRIMINAL LAW -- FOR ANYONE!!!!!!!!!!!!!!!!!!!!!!!!

[Magister]

So, replace "preponderance of evidence" with "beyond a reasonable doubt"? That alone seems a very bad idea, no matter how many exclamation marks.

[Michael P]

I've lost track. Does this judge still think that property tax valuations are always a good indication of market value, particularly for Mar-a-Lago, or has he learned a little bit about how property taxes and financial markets work?

[Hairy_Reasoner]

I would suggest reading his decision yourself, and you would clearly see that he not only has a very sound understanding of how valuations are determined, but that he takes into account the opinions of several different types of valuations of properties, including market value and liquidation value. He also clearly understands, and takes into account, the different methods that experts used to estimate the amount of savings in interest payments the Trump Organization realized as a result of the favorable terms they received.

Regarding the extemporaneous comment he made about the tax valuation, which was taken out of context, my interpretation wasn't that he was trying to argue that there is fraud because the stated market value was higher than the assessed tax value. Rather he was making the point that while tax valuations are often lower than market values, they are not often off by orders of magnitude.

Regardless, setting Mar-a-Lago aside, the court also found that, "The subject financial statements materially misrepresented the value of the Trump Tower Triplex, The Seven Springs Estate, certain apartments in Trump Park Avenue, 40 Wall Street, [...] and a golf course in Aberdeen, Scotland."

see: https://www.nycourts.gov/LegacyPDFS/press/PDFs/OAGvTrump-PostTrialDecision.pdf#page=5

[Wulyum]

The premises for the “victimless” argument are non-existent. The Trump defendants weren’t tried for common law fraud – read the judgement, explained there in plain English on pages 2 and 3.
———————
INTRODUCTION
In this civil action, plaintiff, the People of the State of New York, by Letitia James, Attorney General of the State of New York, seeks monetary penalties and injunctive relief against Donald John Trump (“Donald Trump”) (the former president of the United States); Donald Trump, Jr. (“Donald Trump, Jr.” or “Trump, Jr.”) and Eric Trump (two of his sons); Allen Weisselberg and Jeffrey McConney (two former employees of defendant The Trump Organization, Inc.); and various real estate holding entities. Plaintiff essentially alleges (1) that the individual defendants violated New York Executive Law § 63(12) by submitting false financial statements to banks and insurance companies to obtain better rates on loans and insurance coverage; and (2) that the holding entities are liable for the individual defendants’ misdeeds. Defendants (1) allege that the statements were completely or substantially correct; and (2) crow that the borrowers paid back all loans fully and on time.

Common Law Fraud
The instant action is not a garden-variety common law fraud case. Common law fraud (also known as “misrepresentation”) has five elements: (1) A material statement; (2) falsity; (3) knowledge of the falsity (“scienter”); (4) justifiable reliance; and (5) damages. See, e.g., Kerusa Co. LLC v W10Z/515 Real Estate Ltd. Partnership, 12 NY3d 236, 242 (2009) (“[T]he elements of common law fraud” are “a false representation . . . in relation to a material fact; scienter; reliance; and injury.”). Alleging the elements is easy; proving them is difficult. Is the statement one of fact or opinion? Material according to what standard? Knowledge demonstrated how? Justifiable subjectively or objectively? In mid-twentieth century New York, to judge by contemporary press reports and judicial opinions, fraudsters were having a field day.

Executive Law Section 63(12)
Along came Executive Law § 63(12), which began life as Laws of 1956, Chapter 592, “An act to amend the executive law, in relation to cancellation of registration of doing business under an assumed name or as partners for repeated fraudulent or illegal acts.” Jacob Javits, then the Attorney General of the State of New York (the position that Attorney General James now occupies), pushed for the bill, as did the Better Business Bureau of New York City. See Senate Bill Jacket, February 21, 1956. State Comptroller Arthur Levitt asked, “Why not grant the Attorney General authority to enjoin anyone from continuing in a business activity if such person has been guilty of frequent fraudulent dealings.” The preponderance of the evidence standard, the one used in almost all civil cases would apply. Comptroller Levitt noted: “In a suit for an injunction, there is no need to prove the charge beyond a reasonable doubt, as in a criminal case—a mere preponderance of evidence would be sufficient.” Id. In the subsequent six decades, the State has toughened the statute. In Laws of 1965, Chapter 666, the definitions of the words “fraud” and “fraudulent” were expanded to include “any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, false pretence [sic], false promise or unconscionable contractual provisions.” The statute casts a wide net.
“The general grant of power to the Attorney General under section 63(12) has traditionally been his most potent.” 3 Fordham Urb. L. J. 491, 502 (1975). Executive Law § 63(12) now reads as follows: Whenever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business, the attorney general may apply… for an order enjoining the continuance of such business activity or of any fraudulent or illegal acts, directing restitution and damages and, in an appropriate case, cancelling any certificate filed under and by virtue of the provisions of section four hundred forty of the former penal law or section one hundred thirty of the general business law, and the court may award the relief applied for or so much thereof as it may deem proper. The word “fraud” or “fraudulent” as used herein shall include any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual provisions. The term “persistent fraud” or “illegality” as used herein shall include continuance or carrying on of any fraudulent or illegal act or conduct. The term “repeated” as used herein shall include repetition of any separate and distinct fraudulent or illegal act, or conduct which affects more than one person. Notwithstanding any law to the contrary, all monies recovered or obtained under this subdivision by a state agency or state official or employee acting in their official capacity shall be subject to subdivision eleven of section four of the state finance law.

The Financial Marketplace
This Court takes judicial notice that New York State, particularly New York City, is the financial capital of the country and one of the financial capitals of the world. The City’s fabled Wall Street is synonymous with capital formation, investing, trading, lending, and borrowing. In a summary judgment Decision and Order dated September 26, 2023, NYSCEF Doc. 1531, the Court addressed the State’s judicially recognized interest in an honest marketplace: “In varying contexts, courts have held that a state has a quasisovereign interest in protecting the integrity of the marketplace.” People v Grasso, 11 NY3d 64, 69 at n 4 (2008); People v Coventry First LLC, 52 AD3d 345, 346 (1st Dept 2008) (“the claim pursuant to Executive Law § 63(12) constituted proper exercises of the State’s regulation of businesses within its borders in the interest of securing an honest marketplace”); People v Amazon.com, Inc., 550 F Supp 3d 122, 130-131 (SDNY 2021) (“[T]he State’s statutory interest under § 63(12) encompasses the prevention of either ‘fraudulent or illegal’ business activities. Misconduct that is illegal …

[Legal Genius]

The words "fraud" and "fraudulent" in the statute must necessarily be defined by reference to the elements of common law fraud, including reliance. The judge gave no explanation for making up his own strange definition. He might have as well said that "fraud" means "returning a borrowed horse three days late". After all, it's a section 63(12) action by the Attorney General, and that's how she interprets it.

[Theendoftheleft]

I agree that the judge made up his own criteria for 63(12), and that he just begged the question about reliance (and miscited to Essner for that proposition).

But, surely 63(12) isn't COMMON LAW fraud, no? Equitable fraud? Equitable-ish fraud?

[Vryedni]

You didn't read the comment you're responding to, did you? Here's the relevant part that refutes your assertion:

In Laws of 1965, Chapter 666, the definitions of the words “fraud” and “fraudulent” were expanded to include “any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, false pretence [sic], false promise or unconscionable contractual provisions.”

[Theendoftheleft]

I did, and I think Legal Genius is largely correct in his claim about 'reliance' vis-a-vis Executive Law 63(12).

Does that expansion not concern the definitions of fraud per the pertinent Executive law?

Even so, there are different kinds of fraud, at least in different jurisdictions: common law fraud, statute-modified fraud, equitable fraud, etc. They don't all have the same criteria.

[Hairy_Reasoner]

The argument is that the legislature specifically empower the Attorney General to enjoin parties from repeated fraudulent acts in the interest of a substantial segment of population as long as they can "articulate an interest apart from the interests of particular private parties".

I.e., The NY legislature specifically granted the AG the power to do this on behalf the people of NY. They didn't just do this once. They first passed legislation in 1956, and then expanded these powers again in 1965.

It may be worth arguing whether or not the AG should have the power to bring this case and whether the court should have the power to make this ruling. It's pretty cut and dry though, that they DO have that power.

See https://www.nycourts.gov/Reporter/pdfs/2022/2022_33771.pdf#page=4

[Theendoftheleft]

Sincere questions:

1. Has anyone ever challenged the state's power taking THIS form, i.e., an equitable cause of action where the state is the proper recipient of disgorgement remedies. Could a Due Process clause not, credibly, be made that this is really a crypto regulatory/criminal proceeding, so that state police power cannot/should not take THIS form.

2. Has anyone ever challenged the blending of this Exec law’s usage with NY’s penal laws (as happened in this case), for similar sorts of reasons?

3. Do other states have a comparable equitable cause of action for states-as-plaintiffs?

[Stephen Lathrop]

A general comment about harm. Unless there is willingness to enforce reasonably accurate appraisals of value, when the values in question are used as collateral for loans, then there is notably increased risk to a banking system operating with less safety than bankers and regulators suppose. I take that as a major threat to the public welfare of everyone.

Also, it is a pipe dream to suppose bankers who compete for the business of the allegedly super-wealthy ought to be left unsupervised to decide for themselves the standards for evaluating collateral. Banking may be a private business, but the safety of the banking system is a public trust. And that, by the way, is not some novelty of an idea cooked up to get Trump.

[Wulyum]

Excellent point. I accidentally flagged you for review☹️

[Joe_dallas]

Lathrop - Thats a good point - which also points to how dubious the claim that the bank relied on the fraudulent appraisals.

All banks are subject to loan reviews by the fed bank examiners. Given the volume of loans from the bank to the trump entities, its highly likely that the feds did select at least one of the trump loans for compliance.

If there was evidence that the bank relied on the clients valuations of the properties w/o an independent valuation, then the feds examiners would have flagged those loans for being out of compliance. There was no evidence of the trump loans being flagged by the fed examiners, which is another point showing the banks most likely did not rely on the fraudulent personal financial statements.

[Magister]

The Controversies section of the Wikipedia page on Deutsche Bank is edifying. Huge fines by New York and others for widespread schemes at Deutsche Bank that someone thought they could get away with, but bank examiners would automatically discover everything shady about $2 billion in loans over several decades by such a large bank? How can there be any tax evasion when IRS auditors would of course discover it?

[Dr. Ed 2]

With Trump involved -- of course the IRS would find it.

[Magister]

The IRS did not audit Trump's tax returns for the first two years of his presidency, despite an IRS requirement dating from the 1970s. They only started auditing 2016 after the Democrats took control of the House in 2019.

New York seems to have uncovered far more tax evasion by Trump than the IRS.

[Nige]

Is it worth noting that it was an unholy alliance of unregulated banks and real estate developers and assorted financial shenanigans that crashed the entire world economy in 2007?

[Hairy_Reasoner]

It is worth further noting that the "unregulated banks" were much more closely regulated prior to the deregulation activities of the George W. Bush administration.

[iowantwo]

then there is notably increased risk to a banking system operating with less safety than bankers and regulators suppose. I take that as a major threat to the public welfare of everyone

That's what banking regulations, well, regulate
Annual bank examinations do extensive examination of the "loan book"
Assuring collateral is more than sufficient to keep the bank solvent.

[John F. Carr]

The problem as I see it is, the only proper financial remedy in this case in equity is to ensure lenders get any money they are due. The license penalties are harsh, but the financial penalties seem illegitimate as well as harsh.

[Michael P]

Yes, the monetary penalties here seem more in the vein of severe criminal penalties rather than any kind of civil remedy.

[ObviouslyNotSpam]

You think disgorgement of profits is what punitive damages looks like?

[Moderation4ever]

Good rebuttal article. I hope that people do take the time to look at some of the more scholarly articles on this case and to read the opinion.

[Brett Bellmore]

My impression is that the two of them are talking past each other.

Kerr is arguing that the process Trump is being subjected to is formally correct as a legal matter. And it may well be, given current precedent. Skating the edge, but on the right side of it.

Calabresi is arguing that the process Trump is being subjected to is corrupt and abusive. And it can be all that while still following the formal rules.

The real question for me: If what Trump is being subjected to is legal, should it be?

[Dr. Ed 2]

Which is why IO keep saying Dred Scott, which was formally correct based on then-current legal precedent -- and also WRONG....

[Sarcastr0]

Kerr is arguing that the process Trump is being subjected to is formally correct
Calabresi is arguing that the process Trump is being subjected to is corrupt and abusive

1. Kerr calls out a number of representations Calabresi makes and shows they are 100% incorrect.
You didn't read Prof. Kerr's post, did you?

2. Now use this logic as applied to illegal immigrants. Your CONSTANT refrain is they formally broke the law, so regardless of how shitty the system is, they are unworthy of ever becoming Americans.
Suddenly, your hidebound formalism becomes flexible? Yet another bit of inconsistency forced by your Trump support.

[TZM]

As long as we’re going to go on about victimless crimes — consider a “crime” where the only damage is that our lawns get mowed, toilets cleaned, and food delivered.

[Nige]

'The real question for me: If what Trump is being subjected to is legal, should it be?'

Tangentially, Trump has talked about having shoplifters shot out of hand, and you are going to vote for him.

[John F. Carr]

In New York and in D.C. Trump drew a hanging judge. In Florida, a sympathetic judge. In the federal criminal system the sentencing guidelines were created so that the luck of the draw would be less important. If the defendant shoots a man on Fifth Avenue it should matter little which courtroom he ends up in. A shooting scores this many points resulting in that many months plus or minus a few. In practice the guidelines did not work well, largely shifting the job of sentencing from the judge to the prosecutor.

How can a quasi-criminal process like the one in New York be reformed so one judge's anger or sympathy doesn't cause a swing of a billion dollars in fines and costs in a case with no loss to victims?

[Dr. Ed 2]

Abolish Equity!!!

[Noscitur a sociis]

That’s the Dr. Ed I know and love!

[Moderation4ever]

So when, Darrell Brooks, act up in a Waukesha County Circuit Court and is taken to task by Judge Jennifer Dorow, the Judge is praised and runs for a nomination for the Wisconsin Supreme Court. What is the difference?

Different State
Poor defendant vs rich
Black Defendant vs white

Can you rank these differences in order of importance.

[John F. Carr]

Darrell Brooks was a criminal defendant. Trump is a civil defendant. Criminal defendants have more protection against unfair trials and arbitrary sentences.

[Boomer]

A point that's come up often in articles on this subject is the fact that "everyone" in the NY real estate industry inflates asset values. If this is the case, what are the legal ramifications of selective prosecution? Is it fair that NY goes after Trump alone for this specific behavior?

[Dr. Ed 2]

Boomer, a Trump DoJ could have great fun with the Sherman Act. Is there anything in it that says that state officials can't be *personally* prosecuted under it as individuals?

Go after James personally on conspiracy to restrain trade, pretty much the lawsuit that was brought by DoJ against the ABA 30 years ago.

[John F. Carr]

While that would be fun to watch I think the case would be a loser because official acts of state governments are subject to less federal regulation than acts of legal persons (humans, corporations, municipalities, independent state agencies, and miscellaneous others).

There are more effective ways for Trump to get his revenge. The tradition that states should get back in federal spending approximately what residents pay in federal taxes is not a rule imposed by the Constitution. If the federal government's approval of New York City's motor vehicle tolls is remanded for reconsideration, the second look will be much more skeptical than the first. And so on.

[Moderation4ever]

While it is pointed out in articles does not make it true? Do the articles offer proof, or do they just make the statement? Articles also point out that the Trump family's assessment where well beyond the bounds of reasonable disagreements of value. Does everyone in the NY real estate market also over inflate value to the degree that the Trump family did? These would be important to know before making an argument of selective prosecution.

[iowantwo]

Articles also point out that the Trump family’s assessment where well beyond the bounds of reasonable disagreements of value.

The examples I have seen, the bank wrote down trumps valuation by 23.4 percent. If two NYC Real estate Developers are within 25% they consider the deal almost complete. Just a few minor details to work out.

[Moderation4ever]

Again, I will ask what is the source that if developer are within 25% they are considered close to agreement?

[Jumaira]

That aside, Trump's lawyers demonstrated that the banks did not take his valuations at his word, and did their own diligence. I liken it to a threat, where to be criminal, it would have to be understood as a true threat by a reasonable person.

No reasonable person took Trump's valuations at their word. Let's say a small business owner goes into a bank and asks for a credit line. The banker says "What is the business worth?" The owner responds, "I'm kicking ass out there, it's worth a billion by now!"

The banker then asks for the financials, determines it to be worth $10 million, and gives him a $1 million line of credit.

It's clear in my example that the banker did not take the "it's worth a billion by now" seriously. The banks to which Trump made the allegedly false representations did not either.

There was no fraud, and no reasonable fact finder could conclude otherwise.

[bernard11]

Trump’s lawyers demonstrated that the banks did not take his valuations at his word, and did their own diligence.

When did they do that, and how?

[F.D. Wolf]

What is legally reversible? The phrase "excessive fines" comes to mind, for one.

I suspect Prof. Kerr knows as much about real estate valuation as the judge and AG in this case, which is to say, nothing. Who I suspect does know quite a bit about real estate valuation is the man who has been in the real estate development business for 50 years and the multi-billion-dollar banks who gave him loans on his real estate, who have been in the mortgage business for even longer.

In People v. Grout, 161 N.Y.S. 718, 174 A. D. 608 (N.Y. Sup. Ct. 1916), the supreme court overturned a defendant's perjury conviction for allegedly lying about the value of his real estate. The case was essentially a battle of experts for each side.

The People attempted to prove the falsity of said statement in the report of the valuation of the real estate by the testimony of certain real estate experts who themselves varied substantially in their estimates. Thus as to the value of the Seventeenth Ward or Greenport Branch property, those experts varied from $70,000 to $100,000. This difference of thirty per cent was greater even than the excess alleged in the indictment as to some of the properties; so that, upon the theory of plaintiff's counsel, the testimony of one of those experts might well be used to indict and convict the other of perjury. Indeed such testimony must have been much lower even than that upon which the grand jury in the indictment found the real value, as the latter was $430,187.46, and such testimony was $240,437.46, as summarized in the brief of respondent's counsel. The wide difference and uncertainty of such estimates is well illustrated by the frank statement of one of plaintiff's such experts, in which, when asked for his opinion, he replied: 'That would be a very hard thing to state. * * * Every man would have his opinion as to value, and mine would be simply an opinion.' And again: 'Expert opinion in the real estate field varies very much as between entirely honest experts.' The plaintiff's experts estimated the several real properties of the bank to have been worth in the aggregate $240,437.46 as against $547,187.16 given in the report. In other words, their estimate was about forty-five per cent of that given in the statement. Anyone who has had much experience with the variance of the sworn estimates of real estate experts will at once recognize that that difference is nothing striking. In the Coney Island Park case, in which I recently wrote the opinion adopted by the majority of this court, it appeared that as to one of the plots condemned the lowest estimate by the claimant's experts was about three times the highest by the city's experts; and the greatest difference between such estimates of the opposing witnesses was considerably larger. It seems to me a very forced thing to ask the conviction of even a professional real estate expert witness upon the testimony of other like experts showing a valuation of about fifty per cent less. If such a precedent were to be established, I fear that our grand juries would be overburdened with efforts by disappointed litigants to obtain such indictments. The differences alleged in the indictment were even much less than that indicated by the plaintiff's expert testimony.

Id. at 174 A. D. 628-30. (citations omitted, emphasis added).

[F.D. Wolf]

Is Prof. Kerr under the impression that the banks were forced to make these loans? That they could not say “no”? That they took the valuations on the loan applications on faith and exercised no due diligence on their own?

One of the many problems with lawyers is that many, especially in academia, don’t seem to know sh*t about the real world. Far from being “victims”, these banks were thrilled to do business with Trump, and would be thrilled to business with him again, had the Democrats in New York not run him and the millions of revenue he generated for the state year after year out, in one of the greatest examples of cutting off one's nose to spite his face.

[Joe_dallas]

F.D. Wolf 2 hours ago (edited)
Flag Comment Mute User

"One of the many problems with lawyers is that many, especially in academia, don’t seem to know sh*t about the real world. Far from being “victims”, these banks were thrilled to do business with Trump, and would be thrilled to business with him again,...."

That is one of the points that is overlooked in this case. The bank was likely actively seeking trumps business. Banks make a lot of money on the loan business, and most often require depository activity as a condition of the loan[s]. In addition to the earnings on the loans, the depository activity provides a lot of funds which can generate additional revenue for the bank.

Again, it is very dubious that the bank actually "Relied On" the fraudulent valuations in the personal financial statements.

[bernard11]

That is one of the points that is overlooked in this case. The bank was likely actively seeking trumps business.

Which is possibly the reason they took his SFC's at face value. Big banks need big loans. Lending someone the money to buy a new Toyota is nice, but it doesn't move the needle on the bank's value. They need big loans, and are less scrupulous than you imagine.

[Social Justice is neither]

So you're arguing they abdicate their fiduciary duties routinely in a highly regulated industry, which is idiotic but necessary for your insane worldview.

[ObviouslyNotSpam]

You're not familiar with DB, I see...

[David Nieporent]

"These banks"? Are you unaware that Deutsche Bank is virtually the only bank that will still do business with Donald Trump, that all other banks stopped lending to him years ago because of the way he ran his businesses?

[F.D. Wolf]

A slight correction: the defendant's alleged perjury was not as to the value of his own property, but that of a loan applicant.

[Stephen Lathrop]

F.D. Wolf, what do you make of flagrant fraud in the presentation of un-subjective values, like the square footage of the property?

[F.D. Wolf]

You say "flagrant fraud", I say "typo". The evidence that it was not intentional fraud, besides the fact that Trump was not charged criminally by prosecutors desperately looking for any criminal charge, is the fact that the error was corrected as far back as 2017. There was only one example I have read, that of "tripling" the size of his apartment in Trump Tower, the actual size of which could easily be determined with minimal due diligence, as simple as looking at public records (or just looking at the building). It seems if this were some nefarious scam, he would have tried it with other more valuable properties as well.

[arpiniant1]

Uhh yeah, typo, sure you go with that

[bernard11]

First, Trump did not allow even after the discoveryanyone to measure the apartment.

Second, the discrepancy was discovered not by Trump but by Forbes Magazine from public property records.

Third, even after the discovery Trump continued to make up shit to inflate the value of the triplex.

Start at page 60 and RTFD.

Typo my ass. How are you not embarrassed to post such blatant horseshit?

[ObviouslyNotSpam]

TDS. The wonder drug for the Trumpaddict.

[Please, Daivd, Seek Help]

I am a little confused. When you talk about "excessive fines", it seems like the argument is that there was an error of law. But then you cite a case where it seems like it turns on an error of fact. I guess it's possible you think both happened here, but the argument doesn't seem to stick together.

Just from a superficial look at the NY ruling, it looks like the value of the "fines" were designed to be forfeiture of the proceeds of the alleged violation. It seems to me like it would be very unlikely that a higher court would _accept_ the conclusions of fact but vacate the forfeiture on the grounds that it's too high a number.

Now, if your point wasn't about excessive fines and instead was that you think some higher court is likely to find the judge erred in fact then that's fine, it's a long and complicated and fact-dense ruling and I don't pretend to have any kind of mastery of the facts at hand. I just don't understand what the argument in your reply was.

[tylertusta]

I'm pretty sure he's bringing up two distinct criticisms of Kerr's post.

He only expands on the error of fact.

[Wulyum]

You quote a 1916 case. It seems from the Trump judgement's excellent first two pages that that sort of case was allowing fraud to run riot - hence, quoting from that judgement we see the Better Business Bureau and others strongly in favour of a new law in 1956 which even went so far as to proscribe "unconscionable contractual provisions". And "The preponderance of the evidence standard, the one used in almost all civil cases would apply."

Other commentators point out this law has been successfully invoked hundreds of times.
-------------------------------------------------
Executive Law Section 63(12)
Along came Executive Law § 63(12), which began life as Laws of 1956, Chapter 592, “An act to amend the executive law, in relation to cancellation of registration of doing business under an assumed name or as partners for repeated fraudulent or illegal acts.” Jacob Javits, then the Attorney General of the State of New York (the position that Attorney General James now occupies), pushed for the bill, as did the Better Business Bureau of New York City. See Senate Bill Jacket, February 21, 1956. State Comptroller Arthur Levitt asked, “Why not grant the Attorney General authority to enjoin anyone from continuing in a business activity if such person has been guilty of frequent fraudulent dealings.” The preponderance of the evidence standard, the one used in almost all civil cases would apply. Comptroller Levitt noted: “In a suit for an injunction, there is no need to prove the charge beyond a reasonable doubt, as in a criminal case—a mere preponderance of evidence would be sufficient.” Id. In the subsequent six decades, the State has toughened the statute. In Laws of 1965, Chapter 666, the definitions of the words “fraud” and “fraudulent” were expanded to include “any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, false pretence [sic], false promise or unconscionable contractual provisions.” The statute casts a wide net.
“The general grant of power to the Attorney General under section 63(12) has traditionally been his most potent.” 3 Fordham Urb. L. J. 491, 502 (1975).

[Hairy_Reasoner]

Here, your example is from a criminal case, where the burden of proof is beyond a reasonable doubt. That isn't so in this case.

[Mike Hansberry]

It takes two to tango.

Assuming NY state is correct, why have they not also prosecuted the various lenders? Those institutions also benefitted greatly from the supposed fraud.

[Stephen Lathrop]

Hansberry, maybe some lenders should be prosecuted. What would that have to do with Trump's responsibility?

[John F. Carr]

Does the Attorney General have jurisdiction? The New York State Department of Financial Services would have primary jurisdiction over bad lending practices, with local prosecutors taking the criminal side.

[SRG2]

As I have said before, if someone embezzles $1 million from their employer, goes to Vegas, double their money and repays the $1 million before the employer realises it, was no crime committed because at no point did the employer notice the bezzle?

And, of course, it's absurd to suppose a bank executive is going to concede in open court that their internal procedures were fucked up or overridden to accommodate Trump.

[Kristian H.]

How is it constitutional to be fined $350M with no right to a jury trial?

[Mr. Bumble]

Because there is a little known provision that waives any Constitutional rights when your name is Trump?

[mse326]

Seventh amendment applies to suits in common law. Equity is separate from common law. And the fine is basically one of disgorgement, that is not a punishment under the law because it isn't taking what someone was legally entitled to.

I have issues with how easilly the judge is to handwave away valuation not being an exact science. And I am sympathetic to arguments that we should do away with state enforced equity actions (I'm not fully convinced that it would be good because I don't profess to know all the situations it is used to balance against the harms), but that isn't the law as currently stands.

There may well be error in factual determinations, or more discreet legal rulings. But the constitutionality isn't one of them under long standing law. It would be a significant change for a court to rule it unconstitutional on those grounds.

[arpiniant1]

Victimless is patently false
THere is a reason for the gov't oversight
If I go to a bank for a business or commercial real estate loan, it is not judged solely on the facts on paper
It is judged in comparison to other loan applications
If I do not get the loan because other people lied on their loan applications, I do not get to do business and I am a victim of a financial crime
It is a practical impossibility for me to know or bring action for this , so it is the states responsibility
Similar to tax fraud
And similar to tax cases, most of them are settled out of court
The reason traitortrump was hit so hard is he had the temerity[stupidity?] to pretend this was all legal and above board
IT is not

[ObviouslyNotSpam]

It wasn't Fifth Avenue...

[BillyG]

but they wouldn't have gotten the loans without the lies.

Double assumption.

Banks do their own appraisal. Doesn't matter what Trump said. Banks do their own due diligence. Banks never take anyone a their word, especially for illiquid assets such as large building & expensive properties. Strange how we haven't seen what the Deutsche Bank's valuation of the properties were and only seen the prosecutor's. The prosecutor who has no realestate industry experience.

Here's a response from another realestate developer.

[arpiniant1]

Since when do banks do their own appraisal?
You pay for an appraisal on you house, not the bank, tho the bank requires it
Baloney
if this is no crime, the financial system falls apart.
It is not about trump doing this, it is about everyone doing this
If everyone is lying then the system becomes totally irrational

[Jumaira]

You're an idiot. First, while you do pay for the appraisal, the lender selects the appraiser. Second, do you really not see a difference an appraisal done on a Freddie conforming loan for a single family house and a large loan against Trump's assets?

[tylertusta]

Meanwhile, Governor Hochul is out there trying to calm down real estate developers because they see this for what it is.

Banks have better take note of this as well. All it takes is for an elected judge to determine that your valuation is wrong and then your business is on the hook for ungodly amounts of fines.

[arpiniant1]

Uhh, no traitortrumps business was based on lies, most businesses only lie in the margins

[tylertusta]

... but they wouldn't have gotten the loans...

Are you sure about that? Did that come out in court? Did the banks say that they wouldn't have issued loans if Trump hadn't had lied?

[jjsaz]

“… but they wouldn't have gotten the loans without the lies”

The problem with that statement is that the banks terrified the all developers had higher opinions of the values of their properties and that they performed their own valuations. As that is the case at all times (banks seek out third-party appraisals for real estate loans) your statement is false.

Charges of drunk driving require a test to prove intoxication. Trump’s statements were opinions as to his belief in the properties values. Banks did not loan upon his opinions. They loaned on those of their evaluators.

[Jonathansingletary]

Yes, whenever I go into a bank for a loan they always ask me for my opinions on my beliefs about the value of my assets. Then they ask for my opinions on kitties, and if I were a color, which one would I would be.

Lies and misrepresentations become “opinions about beliefs.” And because “everyone does it”and not everyone gets prosecuted for it, it’s totally cool. What a fun party trick!

[David Nieporent]

This case was not about disagreements about valuations.

[rloquitur]

Orin misses the point. This is a BS case, and it smacks of why a Bill of Attainder is banned. A free citizen cannot be expected to tolerate this travesty.

[Estragon]

BigLaw training on display!

[rloquitur]

When something like this happens to you, and I hope it does, then swallow it, fascist.

[Estragon]

U mad bro?

[Estragon]

And yea, if I cheated on my mortgage application I would indeed expect to get in trouble.

[rloquitur]

Huge difference between a personal home mortgage and sophisticated parties negotiating a syndicated credit facility. That comment shows what a maroon you are.

[Estragon]

“Maroon”

Pretty big word from Mr. Bill of Attainder.

Res Ipsa.

[Jason Cavanaugh]

Professor Kerr's post was much more compelling than your cowardly reference to some kind of uprising that you certainly won't be a part of.

Poor RWNJs. All they have is vague threats of rebellion. LOL.

[rloquitur]

My point has nothing to do with law. This is lawless, and everyone knows it. It has the accoutrements of law, but it is really just state thuggery. Trump was singled out, and they used a statute that, in this context is pretty vague. (Note how Hochul had to reassure NY businesses--hmmm, wonder if someone donates a lot of money to the GOP, can they trust her?). Heck, even MSNBC is asking questions.

I'll give you another hypo: In many states, there is no defense to certain violent crimes available if you are forced to do them. So, for example, if someone puts a gun to my head and tells me to shoot someone, if I am tried for murder, duress isn't a defense. Rape is often one of those. So let's say a 14 year old rapes a woman at gunpoint, and she doesn't resist. Technically, in many jurisdictions, she can be brought up on charges. And of course, this never ever happens. But let's say it does. Do you really think that she should have to submit to that process? Does society have the right to expect her to?

The banks knew exactly what was going on. Real estate loans are different from asset-backed or other types of facilities. So, with bank's full knowledge, they used the negotiated value to underwrite the real estate loan. This isn't fraud.

[Sarcastr0]

This is lawless, and everyone knows it.

The sign of someone who has moved into a realm of faith, not facts or law.

[Joe_dallas]

Sacastro as rlocquitor notes below
He is one of the few commentators that understand the lending process. As such, he is one of the few that actually understands the facts.

His statement is correct - "The banks knew exactly what was going on. Real estate loans are different from asset-backed or other types of facilities. So, with bank’s full knowledge, they used the negotiated value to underwrite the real estate loan. This isn’t fraud."

those commenting otherwise, are the ones delving into the realms of faith.

[Nige]

Except none of that was true. Those commenting otherwise haven't read the ruling.

[Davy C]

That rape hypothetical is a claim I've heard before. When I dug deeper it seemed false. Every state I checked had a duress/coercion defense of some sort, either statutory or common law, and this wouldn't fall within the exceptions.

[Both Sides]

IMHO, this blog needs more Kerr and less Calabresi.

[rloquitur]

Maybe, but for Kerr to say that this civil case is in line with others is just a bad joke. Even MSNBC is wondering about the fairness here.

[Sarcastr0]

He provided other cases, chief.

[Drewski]

MSNBC can't wonder. It isn't a sentient entity but rather a legal fiction of personhood. Who is wondering about fairness?

[rloquitur]

https://redstate.com/bobhoge/2024/02/18/even-msnbc-host-katy-tur-questions-trumps-335-judgment-and-business-ban-is-this-fair-n2170299

[Drewski]

Looks like she asked her panel a question for discussion. I don't see any worrying, nor any sign that she thinks it was unfair.

[Randal]

Fox News addicts can't imagine cable news even entertaining a question that might call the party line into doubt.

Anyway, back in the real world, everyone pretty much agrees that Trump got special attention from the DA here. Chris Hayes has no prpblem acknowledging that. But that's what happens when you're a con man who decides to make himself a public spectacle. It's hard for a DA to ignore flagrant lawbreaking, because it sets a terrible precedent. NY doesn't want to be known as the go-to state for real-estate fraudsters.

This is why criminals "keep a low profile." It's pretty common for high-profile criminals to be the highest law-enforcement priority... for good reasons.

[Randal]

Oh and, before anyone says it, going after high-profile criminals isn't selective prosecution. Being high-profile isn't a protected class.

[CJColucci]

With Orin, people can owe people a beer, With Calabresi, someone needs to keep him away from the beer.

[Social Justice is neither]

You're not on Jacobin, sorry for your confusion.

[dwb68]

idk, people who are railing against the verdict haven’t read the ruling. I encourage people to read the ruling: https://apnews.com/article/trump-civil-fraud-trial-engoron-new-york-646814bb4945306f19a22f38fdb246a5

For example: Mar-a-Lago was valued based on use as a single family property, yet the deed specifically foreclosed this use in perpetuity, see p 66, because there was a conservation easement. Conservation easements provide tax breaks, but foreclose development in perpetuity. This fact was hidden. There are many other things, like the inflation of the square footage of some properties.

These valuations supported Trump’s personal guarantees necessary to lower the rates on his loans.

Negligence… definitely. Fraud? idk.

The biggest hole in the ruling is materiality. The judge does a lot of hand waving and quoting famous people, and is very pleased with himself that he already found materiality during summary judgement.

No…I would expect somewhere in the ruling a finding that the misstatement of assets put the SFC below the threshold required in the loan covenants (2.5 billion). I dont think its enough to hand wave here, or say this or that property was mishandled.

The totality of the re-valuations at appropriate numbers, I think, has to bring it below the 2.5 billion threshold for net worth in the loan covenants. Nowhere in the ruling do I see that. The judge claims a few times “no false SFC, no deal”, but this is a lot of handwaving. Its also not true: Trump properties would have been offered a higher rate of interest, as one witness testifies in calculating the interest penalty.

The missing analysis is that its not shown that “but for” these inflated valuations, Trump would not have received these rates of interest, or been able to buy the properties at all (albeit at a higher rate). I doubt the disgorgement of profits from sale of Old Post, for this reason. Trump still may have been able to buy it, at a higher rate, still made the $128MM capital gain, offset by the higher interest charge.

That said, there has been a lot of bad lawyering on both sides and I doubt Trump lawyers will persuade the appeals court to take it up. It will set a bad precedent for business in New York, but I doubt new York cares about that either. Texas or OK Attorney General will start playing tit-for-tat with the Biden family (and Newsome too), because “show me the man, I’ll show you the crime.” is the new, old political game. Fun times.

[rloquitur]

Lenders generally don't want to call a net worth default.

[Drewski]

"Negligence… definitely. Fraud? idk."

Negligence is a theory of law, not a crime or tort (although there is a crime in some jxs called "criminal negligence," these apply to specific acts of negligence and not generally negligent behavior). Fraud by negligent misrepresentation is a thing. Even if his valuation were negligent rather than deliberate, it would not affect the outcome.

[David Nieporent]

The biggest hole in the ruling is materiality. The judge does a lot of hand waving and quoting famous people, and is very pleased with himself that he already found materiality during summary judgement.

No…I would expect somewhere in the ruling a finding that the misstatement of assets put the SFC below the threshold required in the loan covenants (2.5 billion). I dont think its enough to hand wave here, or say this or that property was mishandled.

This is the one part of your comment that I take issue with. I have not read any caselaw specific to Executive Law § 63(12) about materiality, but as a general proposition, materiality just requires proof that the misrepresentation could have influenced the decision, not that it would definitely have changed the decision.

[dwb68]

Also: no, the "fine" is not harsh, once you go through the ruling. The statute calls for disgorgement of profits and interest. I think that the inclusion of the profits from the sale of some properties is debatable. Trump may or may not have received a loan albeit at a higher rate. But: given the judge ruled that "no false SFC, no deal" the fines themselves are appropriate per the statute and consistent with typical fraud penalties.

As I said above, I do think the judges conclusion "no false SFC, no deal" is weak and hand-wavy. Not sure that the appeals court will reverse, though.

[rloquitur]

You obviously have no idea how credit facility negotiations work.

[dwb68]

I absolutely do know how they work, I work at a bank, in credit and market risk.

Your argument is what, exactly?

[rloquitur]

What kind of loans? You on a credit committee that deals with these types of loans? ABL? Cash flow deals? Maybe you could explain why borrowers in certain facilities may not want add-backs to EBITDA. How does your bank treat standby L/Cs for purposes of financial covenants?

My argument: the whole thing is BS--you have sophisticated parties on both sides during the transaction negotiation AND the subsequent management (for lack of a better word) of the facility. If the bank swallowed the original valuation of a particular property for purposes of making the loan, it's not really in a position to call a default after the loan is made.

[dwb68]

I am mostly agreeing with you as a practical matter, DB had their big boy pants on when they did this deal. I’ve personally seen some pretty outrageous deal valuations by originators that risk swallowed.

We are also in agreement (I think) that the reliance by DB on the false SFC and the materiality are the weakest, hand-wavy part of the ruling.

Nevertheless, “the whole thing is BS” does not make a persuasive appeal. The SFCs were plainly false and some property valuations are impossible to defend. There are numerous examples, such as the fact that they hid the deed to Mar-a-Lago, which had a conservation easement while the valuation was based on building residential properties. And then there is the place listed as 35,000 sq ft thats really 10k.

Those are big misses by DB! Which makes me think DB valuation department is incompetent. So, of course DB is going to play dumb “hey we didnt know.” DB applied a 50% haircut, that seems to have been the extent of their due diligence on the SFC. Were the misstatements material? Did DB really rely on them? Maybe, maybe not. The judge thinks so. I doubt an appeals court will contradict his findings of fact.

So while I agree that this was unfair, selective prosecution (welcome to New York!), I still dont see a persuasive argument that an appeals court will accept. If the appeals court takes it, it will be to affirm against a defendant they hate.

[Tom for equal rights]

DWB68 comment - "DB applied a 50% haircut, that seems to have been the extent of their due diligence on the SFC."

DWB98 - If true, then seriously undercuts any claim that DB relied on the personal financial statement (SFC).

[bernard11]

If true, then seriously undercuts any claim that DB relied on the personal financial statement (SFC).

No, Tom. Absolutely false. the bank routinely applied the haircut to all developer loans. The DB witnesses described it as "standard."

Page 8.

RTFD.

[rloquitur]

I don't think DB was incompetent at all. It saw an opportunity to make money with a client that could go elsewhere. It got to where it needed to be. The bank regulators had to know of the valuation practices, and concluded that there was no safety/soundness issue and didn't have a problem with borrower conduct. Note how FDIC/OCC hasn't said boo about this.

[dwb68]

“bank regulators had to know of the valuation practices” …DB paid 7ish billion in fines in 2016 for misrepresenting characteristics of loans, among other things. Regulators would have seen this incident as part of the systemic risk in DB practices and not called it out specifically. Any MRAs (Matters Requiring Attention) or MRIAs Matters Requiring Immediate Attention) regulators gave DB would be confidential.

Plus, DB is still under regulatory scrutiny for other risk management problems, most recently money laundering.

In any case, the premise that “regulators had to know” is false. Regulators are always the last to know (example: Wells Fargo’s sales practices in 2015/16).

The extent of DB due diligence appears to be the 50% haircut (see footnote 6,7). I dont know how you call DBs miss on Mar-a-Lago and the Triplex anything other than incompetent. A perpetual conservation easement at Mar-a-Lago? 30,000 square feet vs 11,000 square feet?

DB is in a tough spot. They went with “we didn’t know the extent of the lies” rather than “we knew the SFC valuations were false and made the loans anyway” or “ooops, we missed those important details.” … about what I would expect from a big corporate legal department already under fire from regulators on other fronts.

[rloquitur]

Nah, this was a common practice in NY banking world--they knew. Or else the OCC is dumber than we thought.

[Nige]

'It saw an opportunity to make money with a client that could go elsewhere.'

Hang on, was any other bank willing to do business with Trump at the time?

[Drewski]

"I agree that this was unfair, selective prosecution"

People here keep saying this but I have yet to see someone demonstrate a similarly-situated defendant who was not prosecuted, and that's only the first element of three required to make such a claim.

[dwb68]

To deny this was selective prosecution is to deny reality. Real Estate in NYC is a shady business, and Trumps' practices show how its done. Wake me when L James goes after every other real estate developer in NYC.

[Drewski]

Selective prosecution has specific elements that must be demonstrated. Nobody here can clear even the first hurdle. You're addressing the second element, and in a twist you're claiming it is not met: You must show that failure to enforce against similar defendants is not due to poor enforcement generally but rather intentional discrimination.

Somehow you think arguing that enforcement is generally lax will support a claim of selective prosecution. The opposite is true.

[Michael 11]

That can't be correct; if enforcement is generally strict, it isn't possible to show that the prosecution had a discriminatory effect. You just noted that you need to show similarly situated parties who are not prosecuted.

There's no requirement that lack of prosecution of other parties be driven by an illegitimate motive. The requirement is that the prosecution of the claimant be driven by an illegitimate motive. That's easy to show here.

[rloquitur]

That "risk" swallowed . . . . yeah, because other "soft" aspects of the deal made the credit attractive.

[Zarniwoop]

dwb68 wrote:

We are also in agreement (I think) that the reliance by DB on the false SFC and the materiality are the weakest, hand-wavy part of the ruling.

From the opinion at p.75:

Reliance
Defendants have argued vociferously throughout the trial that there can be no fraud as, they assert, that none of the banks or insurance companies relied on any of the alleged misrepresentations. The proponents of this theory posit that lenders demand complex statements of financial condition but then ignore them.
Defendants argument is to no avail, as none of plaintiff's causes of action requires that it demonstrate reliance. Instead, plaintiff must merely show that defendants intended to commit the fraud. Reliance is not a requisite element of either Executive Law § 63(12) or of any of the alleged Penal Law violations. See, e.g. , People v Essner , 124 Misc 2d 830, 834 ( Sup Ct, NY County 1984) (Reliance then is not an element of [Penal Law § 175.45 - Falsifying Business Records], and documents subpoenaed to prove or disprove reliance by the banks are immaterial).

(emphasis added)

[Davy C]

But if the bank *didn't* rely on it, then there were no ill-gotten profits, as he would have received the loan regardless of any attempted fraud. So then what is the money for?

[David Nieporent]

Nevertheless, “the whole thing is BS” does not make a persuasive appeal. The SFCs were plainly false and some property valuations are impossible to defend. There are numerous examples, such as the fact that they hid the deed to Mar-a-Lago, which had a conservation easement while the valuation was based on building residential properties. And then there is the place listed as 35,000 sq ft thats really 10k.

There are other obvious lies. He valued rent-stabilized apartments as though they were market-rate apartments. He valued his Scotland property as though he could build 2,500 homes on it when he was legally allowed to only build 500. He claimed that he didn't have appraisals for properties when he was in possession of appraisals that contradicted him. And he labeled a particular interest in a portfolio as liquid (to satisfy his cash on hand requirements) even though he wasn't allowed to access that money.

[rloquitur]

https://www.nationalreview.com/2024/02/alvin-bragg-prepares-criminal-version-of-ag-jamess-civil-annihilation-of-trump/

[Tabman]

What I've never understood is how when someone who runs for the office of prosecutor on a promise to go after someone---be that someone Bill Cosby or Donald Trump---that office is not thereafter disqualified from bringing any prosecution of that individual. The person may or may not in fact be guilty, but to promise to go after them once in office before taking office seems disqualifying. A different office should handle the matter.

[Nige]

Prosecutors should run on the promise not to go after anyone?

[Jonathansingletary]

This is one of the more silly and mind-boggling arguments out there about the Trump prosecutions: that all these prosecutors are prosecuting to get ahead or to make a name for themselves, which becomes some sort of supposed evidence of corruption. It’s like the newest strain of American anti-intellectualism that is suspicious of careerism.

[ObviouslyNotSpam]

They don't call it an "adversarial legal system" for nothing...

[alexr]

The closest analogous case is the (criminal) conviction of Martin Shkreli. Shkreli was convicted of securities fraud, but none of his investors actually lost money. Shkreli was wildly unpopular for unrelated reasons, which probably prompted people to examine his finances in the first place.

[Magister]

Similar in claims that nobody lost money, which the judge rejected, and "delusional self-aggrandizing behavior". Not really a good comparison for Donald Trump.

[Tax Litigator]

On the "victimless" crime issue, wasn't the argument that the lenders would have charged and received more interest because overstating the value of assets necessarily understated their risk? So, in that sense, the lenders were victims.

In other words, if there were nothing wrong with overstating the value of assets, why did Trump do it on his loan applications and the process involved with them? It is one thing to claim to Forbes that his assets are worth more (there might be arguably no victim there, but just gullible people reading the news), but it is another to make the claim in a financial market where, the theory goes, lenders and other actors may rely upon the overstated values.

[Vryedni]

As you explained, there were victims to Trump's frauds, so your question is purely hypothetical. But as to that hypothetical question, I'd say the answer is that Trump lies compulsively even when the truth will do.

[Legal Genius]

I've been practicing law in New York State for over 35 years. Engoron's conclusion that "fraud" under Executive Law 63(12) doesn't require reasonable reliance is unsupported by any applicable case citation or extended reasoning. It was invented by him solely for this case, and will never be followed by any court again. That's why Governor Hochul is scrambling around to assure businesses that Trump will be the statute's only and last target using that silly interpretation.

[Jumaira]

I practiced for 10 before moving over to the banking side.

There are certain things that would clearly to be be fraud. For example, if Trump had doctored a survey to show a property to be bigger than it actually is, or if Trump had bribed a bank to fabricate financial statements to show more cash than he actually had.

What he did doesn't even come close. I've represented lenders and borrowers, and have had plenty of each commit "fraud" by Engoron's tortured definition.

[Sarcastr0]

I find both these comments interesting, since they seem to come from local practitioners, and speak to the reliance issue which does seem an odd part of the NY law's text.

But if true, they do look like the judge is out to lunch.

Of course, on the Internet no one knows you're a dog.

[dwb68]

Trump should hire you as his lawyer because the ones he has are awful. While I agree, and this is potentially an appealable issue, I dont see the NY Court appeals court taking it up, unfortunately.

[Zarniwoop]

Legal Genius wrote:

I’ve been practicing law in New York State for over 35 years. Engoron’s conclusion that “fraud” under Executive Law 63(12) doesn’t require reasonable reliance is unsupported by any applicable case citation or extended reasoning.

Opinion, p.75:

Defendants argument is to no avail, as none of plaintiff’s causes of action requires that it demonstrate reliance. Instead, plaintiff must merely show that defendants intended to commit the fraud. Reliance is not a requisite element of either Executive Law § 63(12) or of any of the alleged Penal Law violations. See, e.g., People v Essner, 124 Misc 2d 830, 834 (Sup Ct, NY County 1984) (Reliance then is not an element of [Penal Law § 175.45 – Falsifying Business Records], and documents subpoenaed to prove or disprove reliance by the banks are immaterial).

That sure looks like a citation to me. If you want to argue that Judge Engoron misread People v Essner, go for it. But that's a different argument that the trivially-disproven assertion that his opinion "is unsupported by any applicable case citation."

[Legal Genius]

"Applicable" is the key word here. A "see e.g." cite to a 40 year-old lower court criminal case interpreting a NY Penal Law statute which never even mentions Executive Law 63(12) is by no stretch of the imagination "applicable". In polite legal jargon, "the judge's reliance on it was 'misguided' because the case is 'inapposite'". Read Essner for yourself:

https://casetext.com/case/people-v-essner-2

He might have well cited to Marbury v Madison or Roe v Wade. Both are inapplicable".

[Randal]

Executive law 63(12) says reliance isn't required. You probably should've read it in your 35 years of practice.

[Jumaira]

No, actually, it doesn't say that.

12. Whenever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business, the attorney general may apply, in the name of the people of the state of New York, to the supreme court of the state of New York, on notice of five days, for an order enjoining the continuance of such business activity or of any fraudulent or illegal acts, directing restitution and damages and, in an appropriate case, cancelling any certificate filed under and by virtue of the provisions of section four hundred forty of the former penal law   3 or section one hundred thirty of the general business law, and the court may award the relief applied for or so much thereof as it may deem proper.  The word “fraud” or “fraudulent” as used herein shall include any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual provisions.  The term “persistent fraud” or “illegality” as used herein shall include continuance or carrying on of any fraudulent or illegal act or conduct.  The term “repeated” as used herein shall include repetition of any separate and distinct fraudulent or illegal act, or conduct which affects more than one person.  Notwithstanding any law to the contrary, all monies recovered or obtained under this subdivision by a state agency or state official or employee acting in their official capacity shall be subject to subdivision eleven of section four of the state finance law.

[Randal]

The word “fraud” or “fraudulent” as used herein shall include any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual provisions.

I don't see reliance in there, do you?

[Jumaira]

That's not what you said. Had you said "The statute doesn't explicitly require reliance," then you would be correct. But that's not what you said. You said that the statute "says reliance isn't required."

It says no such thing.

[Randal]

Uh... ok.

[Legal Genius]

There's no deception etc. without reliance.

[Randal]

At least Jumaira is saying things that are merely totally pedantic and irrelevant.

You're just making up wrong nonsense.

[Jumaira]

It's not pedantic or irrelevant. There's a huge difference between a statute being silent on something and expressly stating something.

What garbage law school gave you a degree? Thomas M. Cooley? Howard? Chapman?

[Randal]

It's not silent. It gives a definition for "fraud" that doesn't include reliance.

[Theendoftheleft]

As noted by others, NY’s Executive Law 63(12) gives a definition of (equitable-ish) fraud. But it’s silent on the criteria for the definition's application (what counts as misrepresentation and when, what counts as concealment, etc).

The judge cited to the Essner case for the idea that 63(12) doesn’t rely upon reliance. But Essner COULDN’T stand for that proposition because it only concerns particular NY Penal laws.

In the least, the judge just begged the question. At worst, he…

[Zarniwoop]

I'm starting to hear "Legal Genius" in the same voice as Wile E. Coyote

https://www.youtube.com/watch?v=STeVTzWelns

[Legal Genius]

That's what I'd say if I didn't have a coherent reply.

[Zarniwoop]

Additionally, the holding that scienter and reliance are not elements NY needed to prove was previously decided by order of Sep. 26, 2023. For example, at p. 6 of that order:

People v Interstate Tractor Trailer Training Inc., 66 Misc 2d 678, 682 (Sup Ct, NY County 1971) (holding liability under Executive Law 63(12) does not require demonstrating an intent to defraud); Trump Entrepreneur Initiative at 417 (fraud under section 63(12) may be established without proof of scienter or reliance); Bull Inv. Grp. at 27 ([i]t is well- settled that the definition of fraud under subdivision 12 of section 63 of the Executive Law is extremely broad and proof of scienter is not
necessary).

As a NY practitioner, what are your thoughts on the cases cited by Judge Engoron?

[Legal Genius]

I'm not impressed by any judge who has to reach back 50 years to find some lower court decision with no bearing on a loan transaction between sophisticated parties -- in which the plaintiffs universally been required to demonstrate all of the elements of fraud. As to the Tractor case, it deals with the element of scienter only, not reliance. In any event, I doubt the Trump organization intended to deceive a bank it knew would not rely on its loan application.

It's more than a little unseemly that an attorney general would campaign on destroying Trump and then seize on all of his company's records to see if any untrue statements were contained in any of the documents submitting in the course of the "loan roleplay" between the borrower and the banks.

[Zarniwoop]

Your discussion of Tractor conveniently skips the case cited by Judge Engoron that I bolded, People v Trump Entrepreneur Institute LLC (137 AD3d 409). That is a 63(12) case. As a NY practitioner, what are your thoughts on this faithfully reproduced quote:

Further, one decision from this Court has held that fraud under § 63(12) may be established without proof of scienter or reliance (People v. American Motor Club, 179 A.D.2d 277, 283, 582 N.Y.S.2d 688 1st Dept.1992, appeal dismissed 80 N.Y.2d 893, 587 N.Y.S.2d 909, 600 N.E.2d 636 1992 reinstating a §63(12) claim “as a cause of action,” where the AG had pleaded facts amounting to fraud under that provision, as under the statute, “scienter is not required and false promises are sufficient” ). This case, which concluded that fraud under § 63(12) may be established without proof of scienter or reliance, further indicates that the Attorney General may rely on § 63(12) for a cause of action and need not limit itself to claims for common-law fraud only.

Trump Entrepreneur Institute at 417 (emphasis added).

He's tried before. He, Trump, has lost this argument before!

Read it yourself: https://casetext.com/case/people-v-trump-entrepreneur-initiative-llc

As a NY practitioner, do you think Judge Engoron's legal conclusion that reliance is not required for a § 63(12) case will be reversed? If so, why?

[Zarniwoop]

Anyone? Anyone? Bueller?

[Legal Genius]

First, the Trump Enterpreneur case did not "hold" that reliance was not necessary to section 63(12) claim. It held that AG could bring a stand-alone action under section 63(12). In the context of that discussion, it erroneously stated that "one case", People v American Motor Club, held that neither scienter nor reliance were required. In fact, American Motor Club said nothing whatsoever about reliance, and of course, the case involved actually defrauded consumers who relied on false promises. Anyone familiar with the First Department knows that it frequently makes sweeping pronouncements which are at best non-binding dicta, only to "clarify" them later when some more attentive law clerk points out the shoddy reasoning.

[Zarniwoop]

I will gladly accept that you're more familiar with the NY Courts of Appeal than I am (former Federal clerk, and now practice in USPTO ... NY State biz law is miles away from what I do).

But to repeat:

As a NY practitioner, do you think Judge Engoron’s legal conclusion that reliance is not required for a § 63(12) case will be reversed? If so, why?

Judge Engoron cited Trump Entrepreneur Institute (contrary to your earlier assertion that he cited no case at all). I don't hear you complaining that he cited TEI incorrectly, but rather that TEI improperly cited an even earlier (1992) case. OK, sure, maybe you could make some hay from a poor initial foundation. But did Judge Engoron mis-cite the TEI decision from the NY court of appeals in a way that's legal error?

In the bigger picture, why do you think Judge Engoron is wrong that 63(12), which doesn't include a reliance element in the statutory language, nonetheless demands reliance? Step away from the onion layers of case citations for a minute, and get to the legal principles you'd argue to the appeals court. Is it a statutory text argument? Is it a legislative history argument? How do you argue that the court of appeals should be judicial activists, and graft new requirements into 63(12) that are not supported by the text of the statute?

[Theendoftheleft]

Not a NY practitioner either.

But don’t you think the definition offered in 63(12) requires criteria for application (whether reliance itself is a criterion or not)? Seems like a legal gap, one that the court of appeal could now fill…

[Legal Genius]

(1) I don’t think the Court of Appeals will reverse because its judges are drawn from the same pool of liberal Trump-hating hacks as the First Department. And recall that the First Department suspended Giuliani’s law license without notice based on nothing but hearsay statements to the press disputing the 2020 election results.

(2) Yes, I contend that he cited TEI incorrectly because he didn’t distinguish between its holding and its throw-away dicta. The holding was merely that the AG could pursue a stand-alone claim. The dicta was that the statute didn’t require reliance or scienter, which was based on a clear misreading of American Motor Club.

I would also note that in another case brought by AG James under 63(12), People v Northern Leasing Systems, 193 AD3d 97 (1st Dept 2021), the First Department cites to TEI but later states “[a]ll that is required to defeat a motion to dismiss a fraud claim for lack of scienter is a rational inference of actual knowledge”. So that’s inconsistent with the TEI dicta that scienter isn’t required.

(3) I dispute that 63(12) “doesn’t include a reliance element in the statutory language”. ALL fraud claims require reliance — it was the First Department that arbitrarily (in dicta) eliminated the reliance element from the universally-recognized understanding of “fraud” to get Trump. The absence of the word “reliance” from the statute is irrelevant given that “fraud” encompasses it. It’s like arguing that a statute that forbids any “person” from doing something doesn’t apply to “men” or “women” because those words don’t appear in its language. If “reliance” isn’t an element of a 63(12) fraud claim, why require ANY of the elements of fraud? You could just convict him under 63(12) for jaywalking because, after all, the statute doesn’t requiring you to prove anything at all.

[David Nieporent]

The absence of the word “reliance” from the statute is irrelevant given that “fraud” encompasses it.

It's not the mere absence of reliance language from the statute. It's the presence in the definition of fraud of words that clearly do not require reliance, like "misrepresentation." If they merely intended to codify common law fraud, they had no need to include such a broad definition — or any definition at all — in the statute.

Also, TEI is hardly the only case that says that, even if you'll claim every one is somehow dicta. (It's not just American Motor Club, either.)

The entire point of Executive Law § 63(12) is to allow the AG to proactively ensure the honesty of the marketplace rather than to wait for people to be cheated. As with GBL § 349/350, no reliance is required.

[Theendoftheleft]

While that is sensible, it still seems that 63(12)’s expansive definition of (equitable-ish) fraud requires criteria for application. The law’s raison d’etre cannot answer that.

[David Nieporent]

I’ve been practicing law in New York State for over 35 years. Engoron’s conclusion that “fraud” under Executive Law 63(12) doesn’t require reasonable reliance is unsupported by any applicable case citation or extended reasoning.

So are you claiming that Engoron's contrary case citations are fabricated by ChatGPT?

[Legal Genius]

I'm stating they don't stand for the principle he cites them for regarding reliance.

[Theendoftheleft]

Bingo.

[Dr. Ed 2]

"That’s why Governor Hochul is scrambling around to assure businesses that Trump will be the statute’s only and last target using that silly interpretation."

WOW -- if THAT is true, this instantly has gotten a whole lot bigger than a lot of people realize.

And if Hochul is actually doing that -- and I presume that a Governor can't keep something like that secret -- then doesn't it NOW raise some serious Constitutional issues. When the state's Governor is promising that it is a bill of attainder?

Now if she did this concurrent with exercising her authority to remove the judge (MA Governors have this authority, not sure with NY) *then* she'd be on somewhat solid ground, but just telling other business that this was a Trump-only ruling -- wow...

[Legal Genius]

https://amp.theguardian.com/us-news/2024/feb/18/trump-verdict-new-york-business-governor-kathy-hochul

[Roger S]

Yes, this case was just about getting Trump, and interfering with the 2024 election.

It is amusing to see Trump-hating law professors do back flips to justify Trump prosecutions. They would never defend these civil and criminal cases under other circumstances.

[John F. Carr]

This reminds me of local politics:

Asked if businesspeople should be worried that if prosecutors could “do that to the former president, they can do that to anybody”, Hochul said: “Law-abiding and rule-following New Yorkers who are businesspeople have nothing to worry about because they’re very different than Donald Trump and his behavior.”

Local officials will craft a facially neutral parking rule with the understanding the residents will never be subject to it. A Cambridge parking official once explained to me that police looked for out of state plates when enforcing a rule that also applied to Massachusetts registered vehicles.

Law-abiding businesspeople have nothing to worry about. Hochul-defying businessmen on the other hand, prepare to get screwed.

[rloquitur]

"A Cambridge parking official once explained to me that police looked for out of state plates when enforcing a rule that also applied to Massachusetts registered vehicles."

People who do this ought to be prosecuted and serve very very long prison sentences.

[Randal]

It's not true. She's saying Trump was an especially egregious case, so this prosecution doesn't represent a change in enforcement policy.

[Nestor33]

It’s a bit disturbing to see so many commenters (many or most of whom hold law degrees) seriously pushing the “victimless crime”/no damages concept.

Every law student encounters the legal ethics problem involving the attorney who dips into client trust on a Saturday for some lifesaving organ transplant or the like, and returns the funds on Sunday so that on Monday morning, everything seems proper. What result?

Variants of these are staples in virtually all bar review classes, and the question appears in some form on nearly every bar exam.

As we all know, you better go with (D) Disbarment, although some states may let you off the hook with a one year suspension for the liver transplant type situation.

In short, there’s nothing especially unusual about harsh penalties for “victimless” crimes.

[Dan Schiavetta]

Good point

[Jumaira]

Not even close to analogous. The reason we don't allow attorneys to dip into client trust funds and then return the money a few days later, is because often the contingency that the lawyer is absolutely convinced will happen doesn't happen, and then he has no way of returning the money. So even if the money is replaced, there was still great potential for harm/loss.

In this case, the banks did not rely on Trump's representations before making the loans. Therefore, even had he defaulted on the loans, it would not have been as a result of his alleged false representations.

[Randal]

You guys keep saying the banks didn't rely on the statements. Where are you getting that? It's just not true.

https://www.courthousenews.com/witness-ties-trumps-phony-finance-statements-to-125-million-deutsche-bank-loan/

[Legal Genius]

I'm only pushing the "reliance is required under Executive Law 63(12)" concept.

[Zarniwoop]

Please point to the reliance element in 63(12).

Thanks in advance for your excellent legal work.

[Legal Genius]

It says you have to defraud or deceive someone. No one is defrauded or deceived if they didn't rely on your misrepresentations.

[David Nieporent]

In fact, it says nothing of the kind. Executive Law § 63(12) defines fraud for the purpose of that section, as follows:

The word “fraud” or “fraudulent” as used herein shall include any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual provisions.  

Notice nothing about actual reliance. Even if you somehow read that word into some of those terms, we get: "Any misrepresentation." A misrepresentation remains a misrepresentation regardless of whether people rely on it.

[Theendoftheleft]

Well, that’s mostly it.

The real key seems to be the word ‘and’ before ‘any deception…’.

Everything after that ‘and’ also counts as instances of fraud, too. So, it doesn’t have to be a misrepresentation per se, if you consider concealment, suppression, etc, to not count as such. THOSE count as fraud for this law’s purposes, even if the actions/omissions don’t involve ‘misrepresentations’ as such.

[Legal Genius]

“A misrepresentation remains a misrepresentation regardless of whether people reply on it”.

Fine. I’m a talking frog and you should pay me $100 for the excitement of conversing with such a magical creature on this blog.

That’s fraud? Sure, you didn’t believe me but relied on your own common sense, but it’s still a misrepresentation. Even if you never heard me say it. $354 million, please!

[David Nieporent]

If I made $354 million from that, then I could indeed be ordered to disgorge it. Of course, it would have to be a pattern, not a single misrepresentation, to fall under Executive Law § 63(12).

[Rev. Arthur L. Kirkland]

Is loan sharking a victimless crime (absent leg-breaking, etc.) if the borrower understood, accepted, and complied with the terms?

Is obtaining a better interest rate with phony collateral a victimless crime if the lender is paid as agreed?

Is using illusory collateral to secure loan approval a victimless crime if the borrower pays as agreed?

Is using fake credentials to secure a public contract a victimless crime if the bridge doesn't fall down, the water treatment plant works property, or the incarcerated recipients of medical services don't die?

It is increasingly difficult to believe a law professor authored this mess.

[Rev. Arthur L. Kirkland]

Calabresi's mess.

[Legal Genius]

As to loansharking -- a/k/a usury -- it's not even a crime if you're a BANK which incorporated in South Dakota to gouge New York consumers with 39% on credit cards, despite criminal usury in New York being in excess of 25%. Interesting that Letitia James has no interest in denuding the statute to protect the little people. Instead she rushes to the defense of the poor lil banks who laughed at Trump's financials and used their own.

As to your second and third examples, they're certainly victimless if the lender in each case didn't rely and therefore wasn't deceived. As to your last example, the harm is threatened to innocent third parties, whereas no harm is threatened to the bank that's playing the loan game with its eyes wide open.

[Theendoftheleft]

Those look like crimes, though, or at least like standard common law fraud matters suitable for private action, and not something fitting for equitable causes of action that can only be brought by the STATE, relying upon a preponderance of evidence standard, to enforce an executive law (equitable fraud-ish) tangled with state penal laws—even if the worst that can be done is an injunction, loss of license, damages, disgorgement, etc.

Seems… banana republic-esque, no, Yankee Doodle?

[Jumaira]

U.S. Attorney, take note. John Oliver is trying to bribe a federal official. Hopefully, he will be pursued with the same zeal as the corrupt thugs pursuing Trump are employing.

https://www.businessinsider.com/john-oliver-million-dollars-clarence-thomas-scotus-resign-2024-2?r=US&IR=T

[Legal Genius]

Bbbbbbut . . . clearly no one is RELYING on his joke. Oh wait, you're right -- section 63(12) doesn't require reliance so I'm sure AG James has already prepared a sealed indictment.

[David Nieporent]

A "legal genius" who thinks that people get indicted for civil offenses? Or who thinks that Executive Law § 63(12) is about bribery in the first place?

[Legal Genius]

I was responding to Jamaira's facetious comment with a facetious reply. But I'd say Jamaira's (joking) analogy to bribery is about as on point as Engoron's (unfortunately serious) analogy to the criminal statute in Essner.

[Randal]

In case you missed it, the point of the joke is that Harlan Crow and others are already bribing Thomas millions of dollars a year in goods and services not to resign.

I suspect Oliver would love the feds to come after him. He’s guilty of solicitation at most. Thomas, Crow and the others would be toast — they’ve been doing it for real for years!

[Rev. Arthur L. Kirkland]

John Oliver is a straight-A broadcaster. Funny, insightful, clever, educational, and a moral compass. The writers are excellent and Oliver is too.

Jon Stewart is scheduled to host the Daily Show tonight, I believe. Also always worth watching.

[Theendoftheleft]

Both are infotainers. Both comedians' programs are properly, and classically, classified as propaganda.

Large parts of the American left understand this now, at least.

[Harvey Mosley]

There are two things I have questions about. Since the bank was the victim does the bank get the fines? If not, why? And if this isn't a common practice for real estate developers in NY why did Hochul feel the need to reassure other developers that NY wouldn't be coming after them?

[Legal Genius]

Of course the bank doesn’t get anything. It goes to pay for drag queen shows in elementary schools and luxury hotel rooms for migrants. What’s left overs goes to slush funds for Hochul, James and their cronies.

She needed to reassure them because the real estate industry is one of the biggest contributors to her campaign. She had to let them know that they were safe as long as they kept the money flowing in, unlike Trump.

[M L]

"And they reaped massive profits from lying, Judge Engoron concludes, as they were able to make deals they wouldn't have been able to make, and at rates they wouldn't have been able to get, had they been truthful."

I look forward to seeing what evidence the Judge has for this silly proposition. I have yet to read the new decision. I read the Sept 2023 decision, which disposed of the major issues. It was dog shit. I'm betting this is no better.

The issue about there being no harm or injury is that "fraud" has, definitionally, always involved injury. If you don't have injury, then you don't have fraud - as simple as that. It's not that there can't be "victimless crimes" or victimless civil liability in general for all sorts of conduct, it's just that it isn't fraud.

Google yields the following summary:

There are five elements to a fraud claim: “(1) a material misrepresentation of a fact, (2) knowledge of its falsity, (3) an intent to induce reliance, (4) justifiable reliance by the plaintiff, and (5) damages.” Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 559 (2009). A plaintiff alleging fraud must meet each element in order to prevail, whether it be on a motion or at trial. Menaco v. New York Univ. Med. Ctr., 213 A.D.2d 167 (1st Dept. 1995). The failure to meet any one element will, therefore, result in the dismissal of the action. Gregor v. Rossi, 120 A.D.3d 447 (1st Dept. 2014).

With respect to the last element, “To establish causation, [a] plaintiff must show both that [the] defendant’s misrepresentation induced [the] plaintiff to engage in the transaction in question (transaction causation) and that the misrepresentations directly caused the loss about which [the] plaintiff complains (loss causation).” Laub v. Faessel, 297 A.D.2d 28, 31 (1st Dept. 2002).

Also lacking here I suspect is the reliance element, since there has been no indication from the lenders that they relied on any of this nonsense. From the same summary:

In Ambac Assur. v. Countrywide, 31 N.Y.3d 569, 579 (2018) (here), the Court of Appeals described the justifiable reliance requirement as a “‘fundamental precept’ of a fraud cause of action.”

On this a number of other issues I've detailed before, Judge Engoron's opinion was terribly shoddy. This comes off as a partisan political hit job. No surprise, the prosecutor literally ran on "finding the crime" to go after Trump.

"I'm not sure what "that way" means. But based on a quick Westlaw search, I do see opinions about other equitable enforcement actions...."

I have repeatedly challenged anyone to find a case of fraud liability in New York, under this statute or otherwise, where there were no damages. This is what "that way" would mean, I think. None of the cases listed sound like a fit.

[Sarcastr0]

Read the damn thing rather than this lazy ‘Google yields the following summary’ stuff!

Like, it's fine not to read an opinion, but then maybe don't try and opine on it?

[M L]

This decision rests on the prior decision that I read which I'm talking about here. And the New York case law about the elements of fraud? It is what it is.

[David Nieporent]

Why would the elements of fraud be relevant?

[M L]

Because, as Engoron wrote in his decision last year,

"As has been explained to defendants many times , in many legal proceedings , and in painstaking detail , where , as here, there is a claim based on fraudulent activity, disgorgement may be available as an equitable remedy, notwithstanding the absence of loss to individuals or independent claims for restitution Ernst & Young at 569"

So the Judge is relying on seminal cases from the 2008 financial crisis, where the damages and harmful ripple effects crippled the whole country.

Ernst & Young separately paid $99 million in damages to Lehman investors for the conduct at issue.

The proposition here is that disgorgement is a remedy that is not limited to specific losses, but it is available when there is a claim based on fraudulent activity. So you still need to have fraud.

This case was basically already decided back in Sept 2023.

[Zarniwoop]

So you still need to have fraud.

No. This is a basic comprehension fail. Read what Judge Engoron wrote: this is a 63(12) case, not a common-law fraud case. The elements are different. You keep returning to the elements of common law fraud. And Judge Engoron agrees with you on that! Because it's not common-law fraud, which he gets out of the way on page 2 of the opinion!

Imagine you're representing the Trump Org on appeal here. If all you argue is that the Trump Org didn't commit common-law fraud, you're going to lose because you're not addressing Judge Engoron's findings of fact and conclusions of law.

[M L]

No, his ruling that fraud under 63(12) is vastly different from common law fraud, or doesn't require damages, is the very thing that should be questioned on appeal. None of the cases he cites say that, this is the first case to say such a thing.

There are some cases saying that, when there is fraud as a threshold matter, "disgorgement" is an available remedy under 63(12). That is questionable and that issue should be reviewed as well.

I do see that Engoron revoked his order to "cancel business licenses." But he still maintains that the authority to do so exists, and holds out the possibility that some cancellation of LLCs still may occur. The problem is there doesn't seem to be any such authority if you go and look up the reference to "any certificate filed under and by virtue of the provisions of section four hundred forty of the former penal law or section one hundred thirty of the general business law".

This opinion is full of holes even from a cursory look. Every aspect of it should be scrutinized and surely there are many more holes. Trump's lawyers do need to do that, if he can get some competent ones. But legal arguments don't make any difference to somebody like Engoron since he's a corrupt partisan hack filled with hate on a quest to get Trump.

[David Nieporent]

No, his ruling that fraud under 63(12) is vastly different from common law fraud, or doesn’t require damages, is the very thing that should be questioned on appeal. None of the cases he cites say that, this is the first case to say such a thing.

Can't tell whether this is shoddy research or dishonesty on your part, but either way, it's pretty dumb. Why would the legislature enact a statute to grant the AG a power it already had?

[M L]

You only need to make it to page 2 to answer your question.

"State Comptroller Arthur Levitt asked , “ Why not grant the Attorney General authority to enjoin anyone from continuing in a business activity if such person has been guilty of frequent fraudulent dealings . The preponderance of the evidence standard , the one used in almost all civil cases would apply ."

So it's not a power it already had.

[Eric Rasmusen]

As I understand it, the statute does not require any loss to anyone. As Prof. Kerr says, it is like a law against drunk driving: whether there's harm doesn't matter.
On the other hand, for the statute, maybe, and surely for disgorgement, I bet there has to be reliance on the falsehoods. If the lender would have lent anyway, then Trump has not profited from illegal actions, so his gains are not illicit and he should not have to forfeit them.
Did the judge find that the loans would not have been made but for the falsehoods? On a quick look at part of it, I don't see that, though I see a lot of weasel words avoiding that issue. But maybe I missed it.

[Randal]

You're trying to argue your way around the statute. It's like if the drunk driver's defense was "But there was no one else even on the road! Not only wasn't there any damage done, there was no possibility of damage."

It doesn't matter. We don't, as a rule, want people driving drunk, even if they're doing so "safely." Similarly, NY doesn't want the banking industry to be replete with intentional misrepresentations, even if those misrepresentations are largely getting ignored.

[M L]

From what I’ve read so far, it seems the judge just says things along the lines of “of course lenders rely on these personal financial statements, otherwise why would they ask for them? Case closed.” And there’s various testimony that, of course asset values can affect lending decisions, etc. But it’s all a far cry from any sort of proof that these particular loans actually would not have been made but for the incorrect valuations on these statements.

The statute in question provides certain remedies for "persistent fraud or illegality." I don’t think there has ever been a case saying that “fraud” under the statute doesn’t require damages. There is a list of things that fraud, for purposes of the statute, “includes.” It’s not a definition. But it is a broad list. To me, the word fraud needs to be interpreted or defined at least somewhat by reference to something beyond just the statute (i.e. New York law). Just as many other words in the statute would need to be – for example words like “restitution,” “damages,” “misrepresentation,” “unconscionable” etc.

Yet another point (there are many) I found really unconvincing from the judge’s Sept 2023 decision (which is incorporated in this new decision) is his dismissal of the disclaimer that was included with the financial statements, the disclaimer was really quite strong, I don’t see how a counterparty could accept that language and then claim that they relied on the ultimate valuation numbers in any significant way.

[Wulyum]

The main judgement is that his "statements of financial condition" were persistently false and deliberately prepared thus - ie fraudulent. Contrary to very clear and specific law. All very well explained in the judgement. An easy read in the first two pages.

[M L]

No. First, that's not what fraud means. The judge got it wrong. Second, the judge decided that scienter/intent was not even required, so your explanation is contrary even to what the judge claims. The judge's position is an easy read, though blatantly wrong, but you didn't even comprehend it at face value.

[Zarniwoop]

Judge Engoron's decision emphatically does not rely on the elements of common law fraud. See pp. 2-3 of the opinion.

If you want to disagree with his opinion, that's fine! Let's throw down!

But disagree with what it actually says, not your mischaracterizations of the decision.

[M L]

This is a political hit job.

Can you find a single example of anyone ever being subject to something like this for . . . *checks notes* . . . overstating their opinion on the value of real estate, when there was no damages or reliance?

[Zarniwoop]

"This is a political hit job" is a political hot take. It's totally legit for you to have that belief.

And if that's your lead argument on appeal ... well, when neither the facts not the law are on your side, good luck with pounding on the table.

[David Nieporent]

Trump was not subject to something like this for "overstating his opinion on the value of real estate." The problem is that people haven't read the court decisions, get all their news from Fox, and so don't know what the case was about. It's not about varying "opinions" on the value of things. It's about lying about objective facts.

[M L]

Yes it is, they overstated the value of the real estate, their opinion on its value seems to be not that of the markets.

[David Nieporent]

They clearly did lie about (not 'overstate') the value of the real estate, but they lied about objective facts. The square footage of a property is not opinion. Whether apartments are rent-controlled is not opinion. Whether there are deed restrictions on development is not opinion. Whether one is legally allowed to build 500 homes or 2,500 homes on a property is not opinion. Whether one's interest in a partnership is a liquid asset that one is entitled to withdraw is not opinion. I could go on, but until you acknowledge these things there's not much point.

[M L]

The one square footage number is an exception, but overall this is just about the valuations.

The Trump Org did not represent to someone "there are no deed restrictions." (Obviously, any lender using real estate as collateral would know whether there are deed restrictions anyway). Instead, it is alleged that a valuation methodology and formula was used which was flawed in light of the deed restrictions, resulting in a valuation that would have been more appropriate for property that was saleable as a single family residence.

This part was funny:

"John Shubin is a lawyer called by the defense as an expert in land use planning, entitlement , and zoning. On direct examination, Shubin attempted to offer a host of legal conclusions about the deed restrictions that encumber Mar- a - Lago, plaintiff's objections to which this Court sustained, as it is exclusively the Court's provinceto interpretand apply the law. Accordingly, there was no evidentiary value to Mr. Shubin's testimony."

Just so.

[Zarniwoop]

Having acknowledged that the square footage claim was an objectively-ascertainable lie, would you care to address the other objectively-ascertainable lies?
What’s your take on:
“rent controlled apartments are valued as if they are not rent controlled”
“Mar-a-Lago is valued as if there are no deed restrictions”
“Property is valued due to 2500 unit development potential when it’s really only 500 units”
“Assets are offered as liquid when they are, in fact, not at all liquid”

Just how many lies before you start to figure out DJT is, in fact, a liar?

[M L]

Try reading my comment before you reply, Zarniwoop.

[Randal]

What Sarcastr0 said.

Plus, how stupid are you that you didn't notice that the Google result you got doesn't apply here? It's talking about the tort, obviously, going on and on about what the injured plaintiff needs to show.

Do you think NY or Letitia James are claiming that Trump did a fraud against them? You have a severe misunderstanding of the case.

[David Nieporent]

The issue about there being no harm or injury is that “fraud” has, definitionally, always involved injury. If you don’t have injury, then you don’t have fraud – as simple as that. It’s not that there can’t be “victimless crimes” or victimless civil liability in general for all sorts of conduct, it’s just that it isn’t fraud.

You have to read all the way to page 2 of last week’s opinion to read Engoron’s explanation of the difference between fraud and Executive Law § 63(12). (It’s also explained in the summary judgment decision you claimed you did read.)

[M L]

As I explained in detail previously, Engoron's arguments could be improved by throwing out his shoddy reasoning and bogus citations to case law, and instead opting for a purely statutory textual position - the position that this statute adopted a new definition of fraud that was otherwise alien to New York law. Maybe he noticed this.

The question is, is this a brand new interpretation specially formulated for Trump? Or is there a single example of this happening before?

[Nige]

Is there a single example of a similar set of actions?

[Zarniwoop]

Oh the irony: Trump lost this argument before, in an appeal decided in 2016. Judge Engoron cited it in his Sep 26, 2023 order at pp.6-7.

People v Trump Entrepreneur Initiative LLC (137 AD3d 409) is a 63(12) case. Regarding the elements of proof for 63(12) compared to common-law fraud:

Further, one decision from this Court has held that fraud under § 63(12) may be established without proof of scienter or reliance (People v. American Motor Club, 179 A.D.2d 277, 283, 582 N.Y.S.2d 688 1st Dept.1992, appeal dismissed 80 N.Y.2d 893, 587 N.Y.S.2d 909, 600 N.E.2d 636 1992 reinstating a §63(12) claim “as a cause of action,” where the AG had pleaded facts amounting to fraud under that provision, as under the statute, “scienter is not required and false promises are sufficient”). This case, which concluded that fraud under § 63(12) may be established without proof of scienter or reliance, further indicates that the Attorney General may rely on § 63(12) for a cause of action and need not limit itself to claims for common-law fraud only.

(emphasis added) So, yes, looks like there's 1992 precedent (so plainly not crafted for Trump in this case). And it was already applied against him in 2016, so DJT and his lawyers should have been acutely aware of it.

But please, keep telling us how the Trump Org didn't commit common-law fraud. Arguing about the reasons Judge Engoron didn't rule against the Trump Org is sure to WOW!!1! the court of appeals.

[M L]

I ask for a case involving someone other than Trump, and you give a case involving Trump. Nice.

Judge Engoron repeatedly misrepresents the cases he cites, and he cherrypicks cases for the results he wants, ignoring all others.

As to People v. American Motor Club, your quote says "one decision from this Court has held that fraud under § 63(12) may be established without proof of scienter or reliance." This says nothing about the damages element. And looking at the case, it says nothing about reliance, actually. Only scienter. Seems that was just a lie. Finally, that case involved damages, so it does not fit my request:

"It is alleged consumers who purchased AMC contracts did not receive the service and benefits promised by virtue of respondents' denial of valid claims, delays in processing claims and making repairs, and failure to make proper repairs."

"hundreds of consumer complaints upon denial of claims. AMC imposed a requirement of taking polygraph tests upon claimants and even then failed to pay many claimants who had successfully passed the test."

[Zarniwoop]

I ask for a case involving someone other than Trump, and you give a case involving Trump. Nice.

An appeal decision handed down in 2016, pre-presidency. Maybe you want to claim that the Deep State has a time machine, and was conspiring against him way back then? Precedent is precedent. Suck it up that your orange jeebus has tried this argument and lost this argument already.

[M L]

Orange jeebus! You really got me there.

[Zarniwoop]

Note that earlier you asked:

The question is, is this a brand new interpretation specially formulated for Trump? Or is there a single example of this happening before?

There is a specific example of this happening before in 2016, so it's not a "brand new interpretation". That it happens to also be Trump trying the same loser argument in 2016 is hardly a good argument that the same loser argument is now somehow valid.

[M L]

Look at your comment again. Where does it say anything about fraud under 63(12) not requiring damages? Failing that, where does the 2016 Trump case say anything like that?

[Zarniwoop]

It doesn't, because I was responding to your "is this new" query with a resounding "no, it's not new" (see: 2016 decision).

Keep pounding on the table at moving targets, I'm sure that will work as an appeal strategy.

[M L]

Try reading again with better comprehension and you will see that the word "this" refers here to the idea that fraud under the statute doesn't imply harm or injury.

[Theendoftheleft]

If this were so (i.e., that reliance isn’t a necessary criterion for Executive Law 63(12) fraud action), then why didn’t the judge in this case cite to Motor Club on page 75/92 in addition to People v Essner?

Surely, if you were correct, Motor Club be a superior citation to Essner, which just concerns the penal laws and not Executive Law 63(12), no? Page 283 of Motor Club discusses scienter. Where is the case’s discussion of reliance? (The Trump Entrepreneur Initiative case is cited to twice in this new judgment, albeit not for the contested proposition in question either.)

[Zarniwoop]

You have to read all the way to the third paragraph of Judge Engoron’s decision to get to this handy item:

The instant action is not a garden-variety common law fraud case. Common law fraud (also known as misrepresentation) has five elements : (1) A material statement ; (2) falsity ; (3) knowledge of the falsity (scienter) ; (4) justifiable reliance ; and (5) damages . See, e.g., Kerusa Co. LLC v W10Z / 515 Real Estate Ltd. Partnership , 12 NY3d 236 , 242 (2009) ([T]he elements of common law fraud are a false representation in relation to a material fact ; scienter ; reliance ; and injury.). Alleging the elements is easy; proving them is difficult. Is the statement one of fact or opinion? Material according to what standard? Knowledge demonstrated how Justifiable subjectively or objectively? In mid-twentieth century New York, to judge by contemporary press reports and judicial opinions, fraudsters were having a field day.

(emphasis added)

Immediately followed by a discussion of how 63(12) is different from common law fraud.

[M L]

The Judge's interpretation of the statute is not plausible, and is unsupported by case law.

I would also question the theory of "disgorgement" being available under Executive Law 63(12), as the statute only reads "restitution and damages." The Judge relies on People v. Ernst & Young, which is quite underwhelming and should be reviewed. It cites People v. Applied Card Sys. for a proposition that it does not support.

Of course, beyond that, the entire remedy is ludicrous. Taking all of the money they ever made? Barred from doing business, etc?

The legal details hardly matter ultimately because this is purely political warfare.

[David Nieporent]

The Judge relies on People v. Ernst & Young, which is quite underwhelming and should be reviewed. It cites People v. Applied Card Sys. for a proposition that it does not support.

Are you the same commenter who raised this specious argument when the summary judgment ruling was handed down, or was that someone else? Engoron is not only entitled to, but required to, rely upon binding precedent, whether or not you think that precedent correctly stated prior law.

[M L]

And the superior court is entitled to review (1) whether that precedent is correct, and (2) whether it was, in fact, the only "binding precedent" on Engoron or one of several conflicting cases that he chose to follow. Either way, that precedent is about a certain remedy and does not address the first issue of fraud, and is not an example of a case that did not involve damages.

[Zarniwoop]

The Judge’s interpretation of the statute is not plausible

Do you fancy yourself a textualist? An originalist?

Please point to the word "reliance" in 63(12), and explain how the interpretation is wrong. Thanks in advance for your excellent legal insights.

[AtR]

I think a better analogy is to prosecuting a publicly despised personality to the full extend of the law for driving 2 miles an hour over the speed limit.

It is legally permissible ... but is really equitable? Do you want to give the government carte blanche to prosecute anyone they want for any reason?

You end up with the Soviet equivalent of the many ways to indict a lightpole.

[Randal]

Are you serious? Lots of people get prosecuted to the full extent of the law (which isn’t very much) for going 2 miles over the speed limit.

What point are you possibly trying to make?

[Sarcastr0]

'Everyone involved was biased against Trump! In reality, this was a trivial thing' says someone with a rooting interest, and no expertise in the area.

[AtR]

Yes, indeed ... it is much more reasonable to accept the expertise of an anonymous character that exudes sarcasm.

[Sarcastr0]

I'm not claiming expertise - I think there is a burden to saying the court got it wrong, much less acted in bad faith.

I'm pretty skeptical, but aware of my limitations. Above, some practitioners spoke up in favor of Trump, and I was interested in their take.

You? you're just asserting stuff you can't back up.

[AtR]

I was stating an opinion, based the circumstantial content I have seen in the media. It was not a professional position and, as you note, it was not supported by any legal references.

[Sarcastr0]

Your chosen analogy is writing factual claims you are now backing away from I see.

[ObviouslyNotSpam]

One wonders what might your opinion be of the "persecution" of Al Capone...

[M L]

Starting to read the decision now.

"Cap rates have an extraordinary effect on the value of a property , and the higher the cap rate, the lower the value."

"Cap rates have an extraordinarily large effect on the value of a property."

LOL. In other news, the quotient has an extraordinary effect on the numerator.

Cap rates don't affect the value of a property. That would be impossible, since a cap rate is a function of a given property value and can't be calculated without said value.

[leweser]

Thank you for your sane and dispassionate analysis.

[iowatwo]

The government investigates crimes. NOT PEOPLE
The government prosecutes crimes . NOT PEOPLE

The courts adjudicate wrongs, not . NOT PEOPLE

Under what predicate did James start the Equity investigation?

[David Nieporent]

Your underlying claims are incorrect, but James began investigating Trump's business practices after Michael Cohen testified to Congress that Trump routinely lies to banks to get financing.

[M L]

Inspector Javert is a good comparison.

https://www.theguardian.com/us-news/2024/jan/29/trump-lawyers-les-miserables-fraud-trial

[M L]

You know it's bad when a left wing writer at the Washington Post thinks this is a totally wild politically motivated result.

https://archive.ph/qrHLP

[Randal]

Oh my god you are the worst. Try reading the articles you post before you post them.

I have no qualms about ordering Trump to pay up for his chicanery — New York Attorney General Letitia James is seeking $250 million — and that’s what the trial now underway will determine. I’ll be cheering when Trump is ordered to write a big check.

The only thing she had a tiny qualm about was ordering the dissolution of the company. But guess what? That wasn't part of the final judgement.

... a left wing writer at the Washington Post thinks this is a totally wild politically motivated result.

No, just another straight-up, easily verifiable lie by our resident fibmaster, M L.

[Zarniwoop]

ooo, colored text, neat! Checking to see if this works

hm, nope. got any hints?

[Randal]

https://www.w3schools.com/tags/tag_code.asp

[Randal]

Well, Donald’s just this guy, you know?

[Zarniwoop]

Hm, style tags, eh?

[ObviouslyNotSpam]

https://www.w3schools.com/tags/tag_code.asp

Like that…

https://www.w3schools.com/tags/tag_code.asp

Not that.

[David Nieporent]

You know ML has no case when he starts lying. Setting aside your description of Marcus, here's what she actually wrote in that link — before the trial, so she couldn't possibly have said what you claim anyway:

Certainly, Trump should be held accountable for any misconduct. I have no qualms about ordering Trump to pay up for his chicanery — New York Attorney General Letitia James is seeking $250 million — and that’s what the trial now underway will determine. I’ll be cheering when Trump is ordered to write a big check.

But forcing the sale or other disposition of his businesses, as the judge ordered in his opinion last week, seems both unnecessary and unduly punitive, disproportionate to the offenses charged

So, in fact, rather than saying in that link that "this" is a bad result, she actually said that something that didn't happen would be a bad result, and that "this" was actually a totally justified result.

[M L]

It's true that this article, from last October, is about the previous ruling.

"The punishment in his case is, as far as I can tell, unprecedented in its scale. . .But forcing the sale or other disposition of his businesses, as the judge ordered in his opinion last week, seems both unnecessary and unduly punitive, disproportionate to the offenses charged. And I worry that this consequence would not have been meted out to another defendant who engaged in similar misconduct. . . The rule of law means not allowing Trump to evade responsibility, criminal or civil, for his behavior. But it also entails not treating Trump more harshly than anyone else in similar circumstances, and I worry that is what is happening here."

I can't disagree with her there.

She does say she would like to see Trump write a "big check." Unclear how much she thinks would be justified. But the ridiculous amounts would actually likely force the sale of assets according to many reports. $450 million, and then the other bogus 83 million verdict. Besides that, wresting away control of those assets is halfway to taking away ownership.

[Randal]

When will we get The Thomas / Crow Affair, coming soon to Netflix! An exploration of friendship.

[Theendoftheleft]

Tell us more about the NY Law in question.

The judgment is based on NY’s Section 63(12) and that state’s penal laws. Where do the disgorged funds go in such cases: to the banks or to the state-plaintiff? The last part of Section 63(12) states ‘Notwithstanding any law to the contrary…shall be subject to subdivision eleven of section four of the state finance law’. What does that actually entail?

If the disgorged money goes to the banks, can’t they all just disclaim it, thereby alleviating Trump’s woes? (The banks might want do so, say, because they don’t see themselves as victims, because they don’t want to scare their other clients, etc.)

If the money goes to the state instead, isn’t that an ironic enrichment on their part, when the banks are said to be the victims? (Why couldn’t the banks claim the money from NY?)

Further, could Trump credibly lodge constitutional challenges to Section 63(12), or at least its application in this case? That law presents itself as grounding equitable causes of action, but rather seems to concern a quasi-criminal or regulatory proceeding—especially as causes 2-7 in this case expressly rely on NY’s penal law. (The judgment states that that law was passed to provide a more effective basis for the state to cancel a business’ registration but then evolved to concern equitable damages and remedies.)

So… could Trump—credibly–claim that Section 63(12), or, at least as applied in this fashion, is unconstitutional for bleeding together the preponderance of evidence standard with causes of action that involve the state’s penal law? That it’s perhaps unconstitutional on other grounds?

Regardless, everyone here seems to think it CANNOT be simultaneously the case that (1) Trump violated the law and (2) NY only prosecuted this case because of his identity and wouldn’t have done so for other parties. But both those things can be true…

[Wulyum]

The banks aren't the victims. The victim is "NY state's reputation as a reliable capitalist marketplace".

A large scale operator who deliberately and calculatingly repeatedly falsifies "Statements of Financial Condition" does so contrary to NYS law. For which there are remedies NYS can call upon.

[Social Justice is neither]

Well the judge is the only one calling "NY state’s reputation as a reliable capitalist marketplace” into question by engaging in this banana republic bullshit. Under these rules, anyone that does not toe the marxist party line can be targeted for similar treatment for any economic activity where they are not the passive consumer. This literally makes real estate listings or borrowings "fraud" but you apparently support corruption.

[Theendoftheleft]

Right, so it's a criminal/regulatory offense masquerading as an equitable wrong---one that has been bled with the analyses of penal laws (in causes two through seven) in this particular case.

That's quite pernicious.

Do other states have a comparable provision?

[ObviouslyNotSpam]

Yes, the money goes to the state, “in the name of the people of the State of New York”.

[nisquire]

There are instances in which lies don't constitute fraud. If the other guy knows you're lying, and doesn't rely on it, he's not defrauded. And if everyone in the game (or line of business) knows that this is a standard practice, it isn't fraud.

[Randal]

It isn't common law fraud. It isn't a tort.

But NY can still make it illegal, and did. They used the word "fraud," but defined it in the law to mean simple misrepresentation, i.e. lying.

[Theendoftheleft]

Again, the state seems to have defined it even more broadly than that.

[ObviouslyNotSpam]

But also narrowed the application to "repeated" and "persistent" fraud.

States doing police powers... Shocking!

[Theendoftheleft]

Police powers in the form of equitable claims where the state isn't just the plaintiff but also the appropriate recipient of disgorgement remedies???

Yes, that is fairly shocking.

[David Nieporent]

In addition to Randal's response, I would add that your comment relies on (heh!) two related, unsupported assumptions:

1. There wasn't reliance.
2. "Everyone does it" / "everyone knows" everyone does it.

Where is the support in the evidentiary record for those notions?

To be clear, I have no doubt that every developer is aggressive in valuing his assets. Maybe he keeps ordering new appraisals until he gets one he likes, and relies solely on that one in making his representations. Maybe he makes overly optimistic assumptions about future costs or revenues. Whatever. But I reiterate that this is simply not what Trump did. He lied, about objective facts. Find me a developer who claims — to a bank — that a 10,000 square foot apartment is really 30,000 square feet. (If there actually is any other developer who does that — and other equivalently fraudulent things, regularly — he should also be gone after, not used as an excuse to protect Trump.)

[Randal]

“Everyone does it” / “everyone knows” everyone does it.

There’s an interesting paradox lurking here. Imagine that banks can get investigated by the regulators, and banks can find out which other banks the regulators are investigating but not whether they themselves are being investigated. Also, whenever a bank figures out that it’s being investigated, it declares bankruptcy the next day. Assume that like, three banks are being investigated.

Those three banks each know that the other two banks are being investigated. All the other banks know that those three banks are being investigated.

Things go on like that for a while. Then on Sunday, the President says, “I’m proud of our bank regulators who are busy actively investigating.”

This gets the banks thinking. The three banks who are being investigated think this: “Those other two banks, assuming they’re the only ones under investigation, only know that one other bank is under investigation. They must be wondering if that bank is the only bank. If it were the only bank, then it wouldn’t know of any other banks being investigated. That means the President’s statement would tip them off that they’re the bank being investigated, and they’ll declare bankruptcy on Monday!”

Monday comes, and of course, no banks declare bankruptcy. Everybody knew they wouldn’t, since everybody knows there are at least two other banks under investigation. But still, those three banks think “Well, the other two banks, again assuming they’re the only two, now both know that they’re both under investigation, so they’ll have to declare bankruptcy tomorrow.”

But Tuesday comes, and no banks declare bankruptcy. “Oh no,” all three investigated banks realize, “that means my assumption was wrong! There must be three banks under investigation, not just two, and I’m the third!” So they all three declare bankruptcy on Wednesday.

The paradox is, before Sunday, everybody already knew that there were banks under investigation. The President’s statement didn’t tell anyone anything they didn’t already know. Why does it have such a disastrous impact nonetheless?

[molyneux]

I heard this long ago as a puzzle about people with painted faces. Not sure why it should be regarded as a paradox though. The informational cascade is triggered by the President's announcement, provided that he thereby provides new information that *some* bank is being investigated. In that case, all the banks learn something new on Sunday that permits them, with each passing of one day, to make a further inference. And there's no paradox.

If, on the other hand, "everybody already knew that there were banks under investigation. The President’s statement didn’t tell anyone anything they didn’t already know" then everyone was in a position, prior to Sunday, to work through the reasoning that led to the joint declarations of bankruptcy. E.g. if some bank was aware of no other banks being investigated, it was already in a position, prior to Sunday when "everybody already knew that there were banks under investigation", to infer that it must be the one being investigated. So the declarations of bankruptcy should have happened earlier and it's simply a fault in your presentation to stipulate that it didn't.

[John Rohan]

Yes, there was one instance of his NY apartment listed as 30k sq ft instead of 11k. His CFO did that. They claimed it was a typo, but OK let's say it was deliberate fraud. That still wouldn't rise to the level of a 355 million dollar fine. Especially when, as I pointed out, the banks made their own appraisals and adjusted accordingly.

The vast majority of the "lies" in this case are about evaluations, which is entirely a matter of opinion. Value is what someone is willing to pay for something. That is the actual value. It's not some hard consistent fact like the atomic weight of helium.

[David Nieporent]

The lies are not about valuations. The lies certainly affected valuations, but the lies were about objective facts, not opinion.
As noted above: whether apartments are rent-controlled is not opinion. Whether there are deed restrictions on development is not opinion. Whether one is legally allowed to build 500 homes or 2,500 homes on a property is not opinion. Whether one’s interest in a partnership is a liquid asset that one is entitled to withdraw is not opinion.

[Judith]

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[ReaderY]

Another similarity between a corporate license and a driver’s license is worth noting. While there are liberty and/or property interests in both, both are priveleges, not fundamental rights, that can be withdrawn based only on a rational basis, and without requiring criminal-level proof.

It’s worth noting that corporation acts letting people incorporate just by filling out forms are a modern and constitutionally unnecessary inmovation. States are free to go back to the traditional approach where every individual corporation required a separate act of the legislature to incorporate, with the legislature free to decide on political grounds whether the proposed corporation was in the public interest and to demand changes as a condition for approval, as is done with building projects under zoning laws. Similarly, corporations, as quasi-public entities, were supervised by courts of chancery under equitable principles. And still are.

In my view, the idea that corporations have constitutional rights independent of their principals was as much a pure judicial power grab, as free of constitutional warrant or legitimacy, as cases like Roe v. Wade or Lawrence v. Texas. It’s not just the left that’s guilty of reading its own ideas about how things should be into the constitution.

Limited liability is a privilege, a public benefit, that the state has every right condition on providing something of value to the public in return. And that can certainly include a requirement to be honest and truthful in ones business dealings. Even if Mr. Calebresi is right that Mr. Trump is somehow free to do business dishonestly so long as nobody is directly harmed he is not free to retain the privelege, the public benefit, of avoiding personal liability.

As I see it, the very concept of a corporation is a creature of the state. It has no natural or innate existence. It is nothing but a legal fiction. Government if it wanted to could simply abolish the concept tomorrow. It couldn’t simply revoke existing charters. But it could stop giving out new ones.

At the very least, surely corporations cannot be said to be members of the people. And only members the people, which only includes natural persons, have a 4th Amendment right to be free from searches and seizures. In exchange for the privelege of limited liability, doing business as an artificial person means government can inspect your books whenever it wants. And frankly, I think this ought to apply to any property a corporation owns.

Similarly, only the people have a right to petition their government. The idea that corporations have political rights independent of their proncipals has no warrant in the constitution. The constitution’s text makes clear that government can limit the right to lobby and be involved in politics to members of the people only.

[Wulyum]

Excellent points. Thank you.

[David Nieporent]

You’re conflating all sorts of different issues there. But suffice it to say that “privilege” is not a magic word that allows a state to impose unconstitutional conditions.

[Randal]

The question that I think about is whether a corporation is also an association. Maybe the corporation itself doesn't have constitutional rights, but the association certainly does. Then, inasmuch as the corporation and the association are co-extensive, the corporation effectively "inherits" those rights.

[Wulyum]

Incorporated organisations, especially those with limited liability, are creations of the law, not natural phenomena.

Genuine question: what constitutional provisions, federal or state, apply to them qua limited liability organisations? Is there any justification for saying that law, which created them, cannot do what it likes with them?

[David Nieporent]

{Comment moved to proper threading.}

[molyneux]

The comparison with drunken driving strikes me as an analogy well made. Very helpful.

I do wonder, however, about the scale of Trump's reported inflation of assets. Engeron wrote that Trump inflated asset values by 12x. This goes to dismiss the suggestion that these were the kind of simple errors, fudges and differences between optimistic and pessimistic evaluations that one would ordinarily expect in the everyday business of real estate. However, it invites another question. How on Earth could banks lend such enormous sums on the basis of such wildly erroneous valuations? Banks are supposed to perform due diligence, and while they might reasonably claim that the accuracy of their own appraisals are, to some degree, provisional upon the client submitting true information, it stretches credulity to think they could naively go along with an overvaluation of 1200%. So, excluding outlandish hypotheses, it seems to me that there are two possibilities. Either (1) the state is grossly undervaluing Trump's assets for the purposes of making its case, and the court is lending undue credence to those undervaluations or (2) the banks were complicit in the fraud, and agreed to accept valuations they knew to be wildly inflated. Why (in possibility 2) would they do that? Because it suited them to finance a sizable project that appeared on their books as a low risk, well secured and therefore highly valuable asset whose *real* risk they could then redistribute onto insurers and investors. Anybody who remembers 2008 knows the kind of thing I'm talking about.

[Brett Bellmore]

You're just talking Kerr's side of the "formally correct"/"morally outrageous" divide. The thing is, the Court is entitled to move that line.

[Stephen Lathrop]

MSNBC offers some talk show hosts who would be delighted to put Kerr on, to say whether or not the hosts did a good analysis.

[Brett Bellmore]

Neither was civil forfeiture, when the drug warriors seized upon it to deny people their constitutional rights. It had merely previously been confined to a narrow application where the legal fiction was a bit less of an outright lie.

I suspect the law is littered with these obscure practices, laying around like unexploded ordinance from a long ago war, ready to be weaponized by people less scrupulous than the folks who had left them buried.

[JustMark]

But, when they were an olden thing, weren't the equitable petitions against the King or King's laws? Here, we have the King saying the law isn't good enough and only through "equity" can he find relief.

[Dr. Ed 2]

The Dred Scott decision was scholarly...

One can be both scholarly and WRONG.

[Sarcastr0]

Who is the king here?

[Voize]

No, the origins of equity were petitions asking the King to intervene in cases where the common law, rooted in tradition and already grown rigid, gave unjust results or no relief at all.

[Abdul Abulbul Amir]

Defendants utilized objectively false assumptions...

Estimates of the value of real estate are always based on false assumptions. That is why different appraisers routinely arrive at different values. The value of a piece of property is only known at the exact instant in time it is sold, at any other time it is guesswork. A professional appraiser is merely a more experienced guesser.

[Moderation4ever]

Back to Dred Scott. Guess you're out of responses.

[tylertusta]

When the AG can put "corruptly" on good-faith valuations anything can be "knowing and consistent."

[tylertusta]

Because Trump is involved, it's gotta be illegal. That's the distinction.

[dwb68]

Read the opinion, p66, on Mar-a-Lago. It has a conservation easement in perpetuity. The way they valued it based on residential use is objectively wrong and false.

[grb]

It was consistant systematic egregious fraud. It wasn’t nudging valuations a little this way or that, but lying at a large magnitude and scale.

Kinda funny how Trump’s cultists in forum avoid those facts.

[tylertusta]

Kinda funny how anyone who disagrees is suddenly a "Trump cultist."

[grb]

And yet here you are, doing everything possible to ignore/evade the fact Trump commited systematic fraud on a large scale.

After all, it’s just his nature, isn’t it? Trump’s so-called foundation wasn’t just a little wiffy around the edges, but a complete fraudulent pile of shit. It wasn’t properly registered, had a board that included one member who wasn’t informed of the fact for almost ten years, the same board that had no record of meetings or deliberations for years on end, and was used primarily a cash pool for Trump’s odd business expenses, fines and baubles. Famously, Trump used his charity to pay little Don Jr’s seven dollar Boy Scout fee. When a billionaire does that, you know he enjoys being a criminal.

Likewise his farcical university, or grossly criminal behavoir on the presidential documents. This is a man who enjoys cheating. Who’d prefer a crooked dollar over a straight one. That’s why the taint of criminality and fraud runs thru everything he does. That’s why he thought he could brazenly steal an election he lost. Shouldn’t you be admitting these facts to yourself, tylertusta?

[bernard11]

There is no other explanation for many of these comments.

Did you read the decision?

[Tom for equal rights]

Queen - read Rloquor's comment below:

Its doesnt require someone to be an expert to know the basics. Perhaps your response is a reaction to knowing so little.

The banks knew exactly what was going on. Real estate loans are different from asset-backed or other types of facilities. So, with bank’s full knowledge, they used the negotiated value to underwrite the real estate loan. This isn’t fraud.

[Drewski]

Equity isn't obscure except to you. It's been part of our legal system from day 1. Literally written into the Constitution.

[Dilan Esper]

Yeah it's really funny that Brett lectures us all the time about what the Constitution really means but he either didn't read Article III or didn't stop and look up "equity" in Black's Law Dictionary when he saw it and didn't know what it meant.

[Sarcastr0]

The Brett Cycle:

Because of a story he is following, he discovers some long accepted detail about the law (equity, conspiracy, civil forfeiture, state judicial review of state voting rights, etc.)

Brett, based largely on the specific facts of the story that got him into the issue, generate a hot take.

This hot take is immediately generalized into a fundamental insight into a long-standing flaw being abused, and which does not reflect how the law would actually operate, if people didn’t lie about it.

Brett next accuses everyone pointing out he’s coming in with profound ignorance of the issues and law of lying. And maybe a bit of violence to punish their bad faith is gonna be needed…

Live in this thread, you can see a new turn of the Brett Cycle.

[LawTalkingGuy]

My favorite example of this was after the Mar-A-Lago warrant where he proclaimed that United States magistrate judges are unconstitutional.

[Jumaira]

When you're in the business of loaning out hundreds of millions of dollars, you damn well better.

[Sarcastr0]

That would be a profoundly inefficient way to operate. By focusing the burden on the banks, you would disincentivize lending.

Seems bad.

[Jumaira]

It doesn't matter what the law prescribes as a remedy, any sensible lender is going to do their own diligence. Period.

[tylertusta]

Straw man arguments are unworthy of my time.

[Sarcastr0]

The 'banks should have been better than to be fooled by Trump's lies' is a truly awful defense if you think about it.

As to your cocksure take on what banks must do, in the interests of scale that's not how we do things since WW2.
The FDA does not test every single drug themselves - they leave that to the industry and then test the test.
Government grants are not audited by the inspector general every year, we have the institutions pay for an audit themselves and submit that to the government.

But many hands make light work. Maybe that means we're not as good at catching white collar crime as we could be. Somehow, the US powers that be think that's a fine price to pay to allow diligence to scale.

[grb]

Wow. Trump’s fraudulent foundation is a “straw man argument”. Trump’s fraudent university is a “straw man argument”. Trump’s open fraud on the presidential documents (committed for all to see as a kind of performance art) is somehow a “straw man argument”.

What a hilarious shtick you have, tylertusta! Above you whine over Trump being treated unfair. Below you wheedle how innocent businessmen must now fear. Yet when someone notes your cult hero is a lifelong criminal, you put fingers in your ears and make child-like noises to make the Bad Facts go away.

Maybe you already know Trump isn’t being treated unfair…..

[tylertusta]

Really, please go on. Tell us how you really feel.

[grb]

tylertusta : “Really, please go on”

You don’t engage with facts very much, do you, tylertusta? Let’s give you another chance, this time with Trump’s sleazy foundation. Issues included :

1. Failure to maintain proper governance. None of the Foundation’s expenditures or activities were approved by its Board of Directors. The investigation found that the Board existed in name only: it did not meet after 1999; it did not set policy or criteria for choosing grant recipients, and it did not approve of any grants. Mr. Trump alone made all decisions related to the Foundation. Trump Foundation treasurer Allen Weisselberg claimed to be unaware that he was treasurer and board member of the foundation until approached by investigators.

2. Solicitation of donations without a license.
3. Didn’t file annual audited reports w/ the New York State Charities Bureau
4. Mishandling of funds raised for veterans’ causes.
5. Coordinating foundation grants with Trump’s presidential campaign.
6. Using Trump Foundation money to settle Trump Organization legal disputes.
7. Purchasing goods/services for personal or business benefit.
8. Diversion of taxable income to the foundation as donations.
9. Granting money to charities that rented Trump Organization facilities.
10. My own favorite : Used his charity to pay Don Jr’s $7 Boy Scout fee.

https://en.wikipedia.org/wiki/Donald_J._Trump_Foundation

[grb]

Here's another Trump story to bounce off your unhearing ears and evade your unseeing eyes, tylertusta :

“Nonetheless, Deutsche Bank agreed in 2005 to lend Mr. Trump more than $500 million for the project. He personally guaranteed $40 million of it, meaning the bank could come after his personal assets if he defaulted. By 2008, the riverside skyscraper, one of the tallest in America, was mostly built. But with the economy sagging, Mr. Trump struggled to sell hundreds of condominium units. The bulk of the loan was due that November.

Then the financial crisis hit, and Mr. Trump’s lawyers sensed an opportunity. A provision in the loan let Mr. Trump partially off the hook in the event of a “force majeure,” essentially an act of God, like a natural disaster. The former Federal Reserve chairman Alan Greenspan had called the financial crisis a tsunami. And what was a tsunami if not a natural disaster? One of Mr. Trump’s lawyers, Steven Schlesinger, told him the provision could be used against Deutsche Bank.

“It’s brilliant!” Mr. Schlesinger recalled Mr. Trump responding.

Days before the loan was due, Mr. Trump sued Deutsche Bank, citing the force majeure language and seeking $3 billion in damages. Deutsche Bank countersued and demanded payment of the $40 million that Mr. Trump had personally guaranteed.”

https://www.nytimes.com/2019/03/18/business/trump-deutsche-bank.html

[tylertusta]

Keep going!

[ObviouslyNotSpam]

This is how you counter the charge that you're a "Trump cultist"?

Keep going!

[rloquitur]

You have no idea on how this stuff works. RE values are negotiated.

[David Nieporent]

This was not about valuation.

[Hairy_Reasoner]

In his ruling, the judge cites the many cases where each of the defendants lost credibility based on statements they made under oath that were later proven to be untrue. The notion of "good faith" is dependent on the credibility of the person saying they are making the estimates in good faith.

"Eric Trump’s credibility was severely damaged when he repeatedly denied knowing that his
father ever even compiled an SFC that valued his assets and showed his net worth “until this case
came into fruition.” Upon being confronted with copious documentary evidence conclusively
demonstrating otherwise, he finally conceded that, at least as early as August 20, 2013, he knew
about his father’s SFCs (begrudgingly acknowledging: “It appears that way, yes”)"
See: https://www.nycourts.gov/LegacyPDFS/press/PDFs/OAGvTrump-PostTrialDecision.pdf#page=32

"When asked on whom he relied to assure himself that making the
representations in the Management Representation Letter was appropriate, Trump, Jr. testified: “I don’t recall who I relied on.” TT 3236. Yet, when he signed the certifications, Trump, Jr. “intended for the bank to rely upon [them].”"

https://www.nycourts.gov/LegacyPDFS/press/PDFs/OAGvTrump-PostTrialDecision.pdf#page=31

"[Donald Trump's] refusal to answer the questions directly, or in some cases, at all, severely compromised his credibility. "

https://www.nycourts.gov/LegacyPDFS/press/PDFs/OAGvTrump-PostTrialDecision.pdf#page=37