Trump loses again in fraud lawsuit

New York’s attorney general Letitia James had brought a lawsuit contending that serial sex abuser Donald Trump (SSAT), his sons Donald Jr. and Eric, and two officers of his companies Allen Weisselberg and Jeffrey McConney and the various Trump organizations engaged in systematic fraud by inflating the value of their properties by outrageous amounts.

New York State Supreme Court justice Arthur Engoron yesterday awarded summary judgment to James on the first and most important claim. This means that the claim was established already and that it did not need to go to trial and the trial could go straight to the penalty phase which will undoubtedly include monetary damages but may also strip the family of control of the properties.

A judge ruled Tuesday that Donald Trump committed fraud for years while building the real estate empire that catapulted him to fame and the White House, and he ordered some of the former president’s companies removed from his control and dissolved.

Engoron ordered that some of Trump’s business licenses be rescinded as punishment, making it difficult or impossible for them to do business in New York, and said he would continue to have an independent monitor oversee Trump Organization operations.

If not successfully appealed, the order would strip Trump of his authority to make strategic and financial decisions over some of his key properties in the state.

You can read the opinion here. I read it and the judge was incredulous at how brazenly they over-valued their properties when trying to raise money from banks and other creditors while claiming that they had no obligation to be truthful in their valuations because their claims included a ‘worthless clause’ that stated that the evaluations they were providing should not be trusted. This is caveat emptor on steroids.

Trump valued Mar-a-Lago as high as $739 million — more than 10 times a more reasonable estimate of its worth. Trump’s figure for the private club and residence was based on the idea that the property could be developed for residential use, but deed terms prohibit that, James said.

And it went on and on, with property after property being assigned values that were many multiples of anything remotely resembling reality, with vague assertions that they would be worth more in the future.

The judge rejected such claims in strong language. He said that commerce depended upon people making good faith efforts to provide realistic estimates and throwing in a ‘worthless clause’ did not negate that obligation. In his words:

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

That is a fantasy world, not the real world.”

The square footage point was actually hilarious. The Trump Tower apartment in which he lived for decades is 10,996 square feet but SSAT falsely claimed that it was 30,000 square feet. His defense for the discrepancy? That “the calculation of square footage is a subjective process that could lead to different results based on the method employed to conduct the calculation.” The judge was incredulous that anyone would make such an argument, saying that if the shape is irregular, then good-faith measurements could differ by as much as 10% or perhaps 20%, but 200% was simply beyond the pale.

The rest of the trial starts on October 2 but SSAT’s lawyers have asked for a delay of course.
In a separate case, SSAT is suing the judge because that is what he does. That is likely to get thrown out.


  1. Matt G says

    If you were to develop this property, it would be worth ten times as much!!*

    *Property cannot be developed

    What has this guy NOT overvalued, including his intelligence, physical attributes, honesty, etc?

  2. says

    …the judge was incredulous at how brazenly they over-valued their properties when trying to raise money from banks and other creditors while claiming that they had no obligation to be truthful in their valuations because their claims included a ‘worthless clause’ that stated that the evaluations they were providing should not be trusted.

    And I, for one, have absolutely no doubt that all those lenders knowingly chose to allow themselves to be deceived, from day one. Does anyone really believe a bank has no ability to independently verify a valuation claim?

    When I refinanced my mortgage, they didn’t even ASK me what my house was worth — they sent their own guy out to write a report, and gave me a copy. And all that trouble for a house worth FAR less than any Trump property (even by a lowball estimate), and a loan of less than half a million.

    IMO the lenders are all at least 90% as guilty as TrumpOrg in this; and I wish the judge could have found an excuse to do to them what they just did to TrumpOrg. The banks could have nipped all that bullshit in the bud, and they knowingly chose not to. This is why banks collapse and cause financial crises that decimate poor communities.

  3. Pierce R. Butler says

    That is a fantasy world, not the real world.

    I eagerly await the Trump™ attorneys’ efforts to educate Judge Engoron in alternative epistemology.

    Surely fantasy authors from Tolkien and Lovecraft to Rowling and King will be left in the shade.

  4. says

    Louis Rossman, the Right To Repair Advocate, put out a video immediately after the verdict against Cheetolini.

    Rossman is in agreement with the verdict and can’t stand the Annoying Orange, but he asks whether New York will clamp down on all fraudulent claims of property space. He demonstrates how nearly all rental properties advertise inflated spaces (as much as 200% of the actual size) and charge rent on the inflated size, not the size the renter is actually getting. The point being, Cheetolini is doing the exact same thing everyone else does, which could be used as a feeble defence on appeal.

  5. JM says

    @1 Matt G: I bet if you compared these figures to what the Trump Organization claimed on their taxes the tax figures wouldn’t be so inflated. The tax figures might even be slightly lower then the actual price for the buildings.
    I find it very annoying that the IRS and banks are not allowed to compare figures.

    @2 Raging Bee: The lenders cut far better deals then you or I could get but Trump eventually screwed enough of them that he couldn’t find US banks any more. Trump would load up one bank with lots of debt until the bank was dependent on the Trump organization payments. Then Trump goes in and says “Cut me a better deal or I declare bankruptcy again”. This is why he ended up with questionable loans from European banks that seems to be fronting Russian money.

  6. GerrardOfTitanServer says

    I think everyone is missing the biggest part of that order. The judge already ruled that every single Trump business, trust, and other organization in New York state in which he or the named family and other persons have a controlled interest, shall be liquidated, and these persons shall be forever barred from being an officer of a corporation in New York state. On top of that, he has to pay damages (technically disgorgement) to make up for all of the money that is obtained wrongfully via fraud. I wonder if it’s going to be enough to bankrupt him. This is nuclear. There’s basically no way for Trump to dodge this. At beast he can delay it a little bit on appeal.

  7. sonofrojblake says

    @JM -- calls to mind the truism that if you owe the bank a million dollars and you can’t pay, you have a problem, but if you owe the bank a BILLION dollars and can’t pay, the bank has a problem. (Numbers not adjusted for inflation…)

    @GOTS, 6:

    There’s basically no way for Trump to dodge this. At beast he can delay it a little bit on appeal.

    Nice Freudian typo. At this point his entire schtick surely has to be delay, delay, delay until he’s the candidate/the President. New York, however, seem to be very much not messing about, and keen to just get on with cutting him off at the knees. I have no idea how effective the “everyone else is doing it, so why can’t I?” defence might be, but annoyingly you have to admit that it’s a reasonable question AND feeds into the narrative that Trump is being targeted for political reasons, not for anything he’s done specifically (otherwise why wouldn’t NY be going after all the other people doing the same thing?).

    I do wonder how much all those businesses will turn out to be worth when they’re liquidated (negative numbers anyone?) and how fast other businesses will spring up (or have already sprung up in anticipation, most likely) in other less aggressive states.

  8. GerrardOfTitanServer says

    I have no idea how effective the “everyone else is doing it, so why can’t I?” defence might be,

    None too effective. It’s already too late. The judge has entered a summary judgment on most of the issues plus that order for complete liquidation of all of Trump’s New York state businesses (and trusts, etc.). Appeals courts are not magic. You can’t just argue the case again. Only certain kinds of issues can be argued on appeal, and it seems like it’s implausible that it could be overturned on appeal.

  9. sonofrojblake says

    @8: and you did your law degree where/when?

    Specifically: “Summary judgment against you means you have no case or no defense whatsoever. This is rarely the case. In an appeal, the judges must review all the evidence in the light most favorable to [Trump, in this case], not the person that filed the motion. So, an appellate court will reverse a summary judgment if any kind of a case is shown. In fact, the court must “accept as true the facts” contained in your response and other filings and make all “the reasonable inferences that can be drawn” from them.”

    Appeal courts are not magic, but it’s not a case of “argue the case again” -- by definition, you’ve not had a chance to argue the case.

    But I’m not pretending to be a lawyer, and I stated that upfront. I’m fascinated to see how this all pans out, but I wouldn’t bet against Trump being able to delay it. It’s practically all he (or his team) are actually good at.

  10. GerrardOfTitanServer says

    In this case, the evidence is so overwhelming without a legally coherent defense even proposed, I’m thinking the summary judgment will stand. The summary judgment was based primarily on Trump’s own filings to the IRS, New York state tax collection, and as part of his bank loan applications, and this evidence conclusively and overwhelmingly show that Trump willfully and repeatedly lied about the values of his properties on financial statements for 10 years.

  11. GerrardOfTitanServer says

    Oh, and Trump’s lawyer forgot to file the paper that asks for a jury trial, meaning it is a bench trial. I don’t think that can be overturned on appeal. He’s toast.

  12. sonofrojblake says

    I do hope you’re right…

    I’d love to be a fly on the wall chez Trump right now. He must be incandescent.
    I’ve stuck my neck out and said I think Trump will be the candidate, and will poll at least 50 million votes, regardless of what happens legally between now and election day. This is predicated on the assumption that he’s alive on election day… but this is a 77 year old fat bloke who looks like he’s on the edge of boiling rage about 23 hours a day, and currently with some justification.
    It’s interesting (to me at least) to speculate: what the hell does the Republican party do if he croaks? (Apart from breathe a huge sigh of relief, I mean).
    Consider: if he dies next week, there’s a reasonable chance they can have a circus of selecting a candidate who can lose to Biden, and right now that’s still most likely Florida Man DeSantis.
    But if he dies AFTER he’s selected but months before the election… what? A quicker version of the circus? Presumably.
    And if he dies like a week or less before the election… what? His VP pick just gets the job, as they would if he died in office (and presumably has to pick a VP of their own?)?
    Are there any circumstances in which the election could be delayed or rerun? I wouldn’t expect there to be, but the US electoral system has many, many features that defy common sense.

  13. John Morales says

    Are there any circumstances in which the election could be delayed or rerun?

    Are you on the internet?

  14. Pierce R. Butler says

    sonofrojblake @ # 12: I’d love to be a fly on the wall chez Trump right now.

    Would you? I suspect a fly coated with ketchup is not a happy fly.

  15. says

    sonofrojblake: Based only on memory, I’m pretty sure that if a candidate for President dies before the election, and his name is still on the ballot (and names can’t be removed from ballots within a certain period before Election Day), and his ticket wins anyway, his running-mate will become President come Inauguration. It’s in the Constitution somewhere.

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