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Engoron ordered that some of Trump’s business licenses be rescinded as punishment, making it difficult or impossible for them to do business in New York, and said he would continue to have an independent monitor oversee Trump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