NEW YORK (AP) — A New York judge ordered Donald Trump on Friday to pay $355 million in penalties, finding that the former president lied about his wealth for years in a sweeping civil fraud verdict that pierces his billionaire image but stops short of putting his real estate empire out of business.
Judge Arthur Engoron’s decision after a trial in New York Attorney General Letitia James’ lawsuit punishes Trump, his company and executives, including his two eldest sons, for scheming to dupe banks, insurers and others by inflating his wealth on financial statements. It forces a shakeup at the top of his Trump Organization, putting the company under court supervision and curtailing how it does business.
Can’t see that it’s fraud to being with. Any anker who doesn’t check valuations before lending deserves the bankruptcy that’s going to arrive real soon now.
Can’t see this as being anything but purely political viciousness.
If Trump took out loans with property as collateral, knowingly overstating the value, with the intention of defaulting and leaving the banks at a loss, then there would be a case
But that’s not what happened. Who was the victim in this that required justice to be served,?
I’m sure Sir Kneel is busy taking notes…
There was no victim and it’s hard to see any legal case. This is purely political. They will try to take him down using lawfare (not actually being very effective) and when that doesn’t work they will arrange a suitable accident, but they will not allow him to stand again.
As you say, purely political given that Deutsche Bank said they were quite happy with the valuations:
https://apnews.com/article/trump-fraud-lawsuit-trial-new-york-53313f64d57b0aa99f756c2c791d29ab
My old rule of “Any organisation with democrat in its name is usually suspect” seems to apply here. Barack has really got it in for him, hasn’t he? Sorry! Slip of the keyboard! I meant Joe…
Of course he’ll be receiving refunds for all the overpaid property taxes won’t he.
Remember, the USA is all about Democracy and the Rule of Law.
Well, for one there are rules and he broke them, and there’s penalties for that whether there’s a victim or not – everyone relies on the integrity of the system and he damaged that. Then there’s the fact that he qualified for lower rates of interest by overstating his assets, or qualified as a bidder in one case at least by doing so. The victims are the banks who would have got higher rates of interest, or the competing bidders who lost.
And anyone who behaved like Trump – right out on the bleeding edge of outrageous behaviour, unrepentant, disprespectful, giving press conferences accusing the judge and staff of bias and political motivation, is going to get the stiffest penalty going.
Generally, the system doesn’t run on a no-harm-no-foul basis. If you put up fake or overvalued collateral and don’t default, you’ve still committed a fraud.
This was a comment in the Wall Street Journal this morning and looks relevant:
stanley schroeder
12 hours ago
Sir. For 30 years, I litigated in areas of federal law that imposed penalties upon employers who failed to comply with specific disclosure requirements to employee benefit plan participants or who failed to properly make offers of, for instance, COBRA coverage. The cases in this area are legion in holding that plaintiff seeking the penalties have NO OBLIGATION WHATSOEVER to plead, or prove, damages. As the courts routinely said, the statutory penalty provisions are there to encourage compliance and to punish violations — regardless of harm or damage suffered. In the employment concept, attorneys’ fees are awarded (and in a case that I personally handled) in amounts that dwarf the actual damage awards. Again, the purpose is to encourage compliance with law and punish scofflaws. If the court of appeals finds that award excessive, that is why we have a proceeding called remittitur. This is neither unusual nor inappropriate. The amount might be subject to challenge; however, as I read the opinion today, the court actually quantified, item by item, the damage award and made awards as specifically contemplated by the statutory structure.
So I reckon the trial was sound, the verdict is solid, and he deserved every penny of it.
That last line was my opinion, not part of the quote from the Journal.
Napsjam – Sure, there will be no end of expensively educated regime loyalists offering up ten dollar words to explain how, ACKSHUALLY, it’s perfectly ok for Democrat-run fiefdoms to retrospectively change the law in order to interfere with elections and procure a man’s destruction at the hands of robed party political activists.
That’s just the kind of shithole America is now. It’s like being lectured on hygiene by an AIDS patient who won’t stop spitting in your mouth.
“THIR,
It has come to my attention that THOME PEOPLE don’t like my AIDS thpittle…”
Is it time for me to “fess up about that occasion over 20 years ago when I advised the auditors that certain stock items were fully saleable despite having my concerns.
As it turns out they eventually realised well above my valuation but based on the reasoning in a previous post I guess I’m still guilty of fraud.
The verdicts in high profile trials in the US have nothing to do with the law or the evidence, only the judge and the jurisdiction.
Hi, Steve.
I’m just a New York lawyer offering my two cents on a question of New York law, but you’re free to listen to the voices in your head instead if you prefer.
I can’t guess why you think your conspiracy wank is more convincing if you do it in a funny voice.
I agree the Journal guy was using ten dollar words, but that doesn’t make him wrong.
And maybe America is a shithole these days, but I live here and I like it. Why don’t you do what Marjorie Taylor Greene recently suggested to Dave Cameron?
Trump lies through his teeth, so no doubt he did try to fluff his valuations, but the bankers analyzed them on their own, granted the loans, and made money. No one appears to have been harmed. However, Trump brings a lot of crap down on his head, and he ended up infuriating the judge who slammed him hard. Whether judges should have that power or not is probably questionable, but they do. He may have been better off not pissing the judge off, but then that wouldn’t be Trump.
but the bankers analysed them on their own, granted the loans, and made money.
And no doubt the bankers were strongly motivated by the opportunity to make that money. If anyone’s been deceitful it’s them making the loans despite it not being in the interest of their depositors, if they’ve intentionally accepted over-valuations.
But valuation’s an elusive concept. It’s only ever a matter or opinion. Especially over things that are not particularly fungible. The only thing real is price tested in a market. Who knows what the properties could have made?
Who knows what the properties could have made?
Nailed it. Over a third of a billion dollars fine for a hypothetical which can never be proved and which caused no loss. ‘Tis a strange legal system they have over there (not that ours is much better eh Judge Tan?).
Hi Napsjam – I’m just a New York lawyer offering my two cents on a question of New York law,
Hopefully we’ll get an African witch doctor along soon to add his valuable perspective on the efficacy of haruspicy in defending Are Democracy.
I can’t guess why you think your conspiracy wank is more convincing if you do it in a funny voice.
Sorry, I didn’t realise you were a New York lawyer, or I wouldn’t have made fun of the way you talk.
I agree the Journal guy was using ten dollar words, but that doesn’t make him wrong
NPCs with degrees are the most tragically superstitious people, because they credit magical, reality-bending abilities to mere words. It takes an IQ of 120 and years of study to talk yourself into holding the dumbest Luxury Beliefs.
Thinking there’s a consequence-free way to weaponise the judicial system against the threat of democratic elections is luxurious.
It’s not so much that the guy is “wrong”, because that would imply there are real thought processes behind his conclusions. In reality, he arrived at his conclusions first and erected a scaffold of dishonest verbiage around that. And, I regret to say, he was probably masturbating furiously at a shrine to Hillary Clinton the whole time.
Hope ya liked them apples. x
Worked with high value items myself and there’s often a range or a limit within which you know the auditors might feel it’s high but they are prepared to accept it. Discussions can go along lines of client suggesting something is worth a million you counter with $600k maybe $750k at a push and submit $700k which is accepted by all concerned. Short of selling the thing no one really knows and overvalued is subjective.
So looks like I’ve been a party to committing fraud during my career.
Had a case where a company was bought out and new owners came in and decided some of the inventory didn’t meet their specs for manufacturing and claimed we had over valued it, they didn’t do due diligence on value to them, so what appears objective can still be subjective
“…if they’ve intentionally accepted over-valuations.”
I read somewhere, but don’t feel like looking it up, that the banks did obtain their own appraisals. Whether they did or not for each loan I don’t know. But in a nutshell, Trump fluffed his valuations, the banks assessed the properties and risks in their own way and made the loans, there were no defaults and the banks weren’t complaining, but Trump committed a crime for fluffing the valuations and pissing off the judge.
Napsjam may be technically correct in his assessment above, that a crime was committed and punishment was appropriate, but it does feel more like a kangaroo trial than a real crime, and that is how his supporters may well see it (I’ve never voted Trump, having dealt with enough dishonest bullies in my life). But Trump brings a lot of crap down on his own head.
You’re right that appraisals are a matter of opinion, and most appraisers use three or more methodologies, each often yielding significantly different values, before the appraiser settles on a final figure. It is not an exact science that’s for sure.
I find it interesting to compare different borrower / lender relationships and contrast the third-party claims made.
Liar Loans A decade and a half ago, the American home lending and mortgage market became very aggressive in seeking out borrowers; lenders had discovered that they could securitize their loans (package them up and sell them to other investors) so they could make many more loans on a small capital base. They eventually reached the state where a borrower could misstate (which in practice, meant dramatically overstate) the value of the property to be charged, as well as his or her income, or even employment status. The first, the valuation, is a matter of opinion and expectation – we probably have to expect that borrowers will be optimistic. The second, though, is a matter of fact cold hard fact – any borrower knows whether they are employed, and knows (or can ascertain) their income – misstatements there are deliberate lies. This was such a staple in the financial world that such mortgages were known as “Liar Loans.”
Well, it all came a-cropper when the the housing market had expanded to the point that there were more homes available than liars who wanted to buy them, and the formerly delightful practice of buying and flipping homes for a profit no longer worked. At that point, some of the liars had to default on their loans, and holders of those “mortgage-backed securities” didn’t get the monthly or quarterly payment they expected. This constrained the mortgage market, since mortgages couldn’t be so conveniently bundled and sold, so lenders were constrained by their capital bases – tighter mortgage restrictions depress and contract the housing market, and we see a vicious cycle forming.
The result was the “Global Financial Crisis” – the worst depression since the 1930’s: thousands, perhaps millions of families lose their homes, businesses fail, and we need a significant government policy response (primarily Quantitative Easing – pouring money into the market to maintain liquidity) to avoid a catastrophe. None of the borrowers on Liar Loans was ever prosecuted for fraud: why would they be – they are somehow the victims in this little escapade? The poor sweet darlings were seduced by evil lenders to take out loans that they didn’t know they would have to repay. If anything, they should be compensated for their loss and hardship. The bankers are widely excoriated as Predatory Lenders who abused the naivete of the hapless borrowers, and are modern pariahs.
In fact, note that the Liar Loans were in effect call options on valuable assets that were anticipated to appreciate – for the liars that got out of the game at the right time (either by luck or skill), it was the greatest financial windfall of their lives
Donald Trump Trump approached banks to request loans, and included statements of the value of properties he would use as security. Any banker knows that valuations are opinion, and that he had better check the values for himself. Having been one , I can tell you that a good banker does not lend on value (at least, not primarily), but on cash flow. I have no idea whether Trump misstated cash flows, but they are much more difficult to fake, particularly given financial statements, and the bank’s ability to observe at least the cash that flows in and out of the accounts held with that bank. Obviously, future cash flows are a matter of expectation, so a prudent lender ensures a margin of safety. We have the testimony of the lender in question – Deutsche Bank – that they did all those things, and were satisfied with the information provided by Trump, and they determined the property values for themselves and found them to be adequate, and the loans to be supportable.
Trump’s statements to the Deutsche Bank did not affect his property taxes, since the property value for that purpose is set by the County Assessor, or similar official. They did not affect his income tax liabilities, since values reported to the IRS or used to calculate gains or losses are based on historic cost plus or minus some pretty specific rules set and enforced by the IRS. Trump’s statements to the Deutsche Bank did not affect the Deutsche Bank – there has been no default; no loss, no Global Financial Crisis, and no families losing their homes. Yet, Trump is a fraudster, the Deutsche Bank is the “victim” of this lossless fraud – or perhaps somehow we all are victims, without having lost a whit. I see no accusations that Deutsche Bank is a Predatory Lender, and no claims that Trump is somehow a naive victim, perhaps deserving of compensation.
The Difference The Liar Loan borrowers were pursuing The American Dream of home ownership – their blatant fraud and deceit could be overlooked. Besides, they were expected to vote in future elections, and there were enough of them that neither party could afford to alienate them. Trump, by contrast, only has one vote – and the whole Trump Organization may muster a couple of dozen. More importantly, he is a threat to the established order (particularly Democrats) so any manner of injuring him or damaging his political hopes is both right and proper – in fact, it’s the duty of any patriot. This is how republics gain the adjective “Banana.”
Sorry for the long post.
One possible wrong detail. Liar loans, I think at least, were really a reference to loans with a short term fix (at markedly below usual rates if increasingly dodgy memory serves) which flipped to floating and market rates after, say, 24 months. V weird by American standards with their usual 25 or 30 fixed rate loans. And clearly and obviously a significant danger if that flip to floating rates happens to people who were strained at the v low initial fixed ones. Which is what happened.
Tim – the short-term, below market fix was unusual (and particularly conducive to flipping), but the Liar Loan was just that – a loan based, at least in part, on the borrower’s assertion of their income, with no independent verification – see Wikipedia, here. WKPD conflates issues of out-of-guidance approval (real estate investors with multiple properties, inclusion of business debt for self-employed, and so on) but the real issue in “stated income loans” was that the borrower’s claims were unverified, which presents a strong incentive to make fanciful claims.
Nicely summarised on the Liar Loans front dcardno. Thanks.
As usual, perverse incentives. Sure, borrowers misstated their positions. But it was the lenders who accepted them. However no loans, no bonuses eh? And no fat balance sheets for the end of year figures. The risks however… Onto the depositors. Or as it turned out the taxpayers because Banks Are Too Big To Fail. (In politicians views anyway)
napsjam
I’m sure you’re a thoroughly decent chap and all the rest, but the very notion of *US justice* : fucking LOL.
@napsjam – February 17, 2024 at 3:14 pm
I’m just a New York lawyer offering my two cents on a question of New York law
I fear that your first half-a-dozen words serve to disqualify you from further comment on the case.
My tutor at law school, who later went on to become the Director-General of Fair Trading, opined on American law thus – “American judges are the best that money can buy“, and frankly, looking at the publically-available information on the case in question, he was right!
This opens up the possibility of endless high-value cases requiring highly paid New York lawyers.
Better still, as the offences can go back decades, New York lawyers have guaranteed work for as far as the eye can see.
Obviously the won’t have affected napsjam’s judgement. New York is famously squeaky clean, prissily so.
Indeed.
Any (Republican) who dares to question the unsubstantiated claim of an old loon with a well documented fondness for rape fantasy will be fined the best part of $100m. That’s how they roll in New York Law.
Or is it just one Republican in particular?
Hmm, lets see how many other NY businesses get prosecuted under this law in the future, and how many of them are run by Democrat donors, then we’ll have an idea of what exactly just went on here.
After listening to the podcasts of the case Steyn v Mann, the finding of defamation in favour of Mann has convinced me that the term ‘American Justice’ is the greatest example of an oxy-moron this century.
I think Donald Trump is a rubbish business guy. In places like Glasgow, Coventry, London, Llandudno, Sligo, Dundee, and Belfast, he would be given nothing.
He wrecked the American economy, and is a associate of Vince McMahon. ENOUGH SAID.
“I think Donald Trump is a rubbish business guy. In places like Glasgow, Coventry, London, Llandudno, Sligo, Dundee, and Belfast, he would be given nothing.”
How about Carlisle, Dublin and Humberside? Not forgetting Leeds, Birmingham and Grasmere of course.
“He wrecked the American economy”
You mean the US economy that had unemployment of a tad under 5% when he became President and was 3.6% in 2019 prior to covid? Whose GDP went from $18.7tn in 2016 to $21.4tn in 2019 (again, prior to covid)? I wish our economy could be wrecked like that……….
How about Carlisle, Dublin and Humberside?
Don’t forget Dundee !
Otto, you wouldn’t want to do business up in Dundee – they’re all fruitcakes.
“Don’t forget Dundee !”
He already had Dundee…..
We’d probably find our occasional troll in Shitterton, Bell End, Scunthorpe or Cockermouth, but most likely Twatt.
How many Morrissey afficianadoes inahbit this blog ?
@Ottokring
All of them.
Tim, you’re wrong about this. Have a look through Engoron’s Order.
Lenders made loans at very favourable rates based on personal guarantees by Trump, backed up by annual Statements of Financial Condition. The SFCs submitted were grossly fraudulent.
Lenders expect some optimism in SFCs. But not outright lies.
In which case one wonders how Deutsche Bank has reached and is maintaining its present level of prominence with such, shall we say, a light approach to due diligence.
You wouldn’t happen to be another New York lawyer by any chance?