The New York Law Used to Find Trump Guilty of Fraud
Being curious as to the NY law under which Donald Trump was convicted of fraud, I looked it up and read New York Executive Law 63(12).
In a nutshell it empowers the attorney general to go to court against anyone who “…engage[s] in repeated fraudulent or illegal acts or otherwise demonstrate[s] persistent fraud or illegality in the carrying on, conducting or transaction of business…”
It goes on: “…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 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 statute allows the attorney general to ask a state judge to stop the business from continuing its activities and fraudulent acts, force the defendants to pay damages or other restitution and, if necessary, order business certificates to be canceled.
New York’s Attorney General, Letitia James, ran her 2018 election and her 2022 re-election on “getting Trump.” Here’s a quote from 2018, when he was still President: “We will use every area of the law to investigate President Trump and his business transactions and that of his family as well.”
She brought the civil suit against Trump in initially in 2022. After a delay by another court, the trial on the charges began in 2023.
The suit sought $250 million in disgorgement, a kind of equitable remedy that is a claw back of ill-gotten gains — the amount of benefit that the state says Trump and the co-defendants personally received from alleged fraud.
She determined Trump allegedly oversaw a “staggering fraud” for more than a decade by inflating his net worth and the value of 23 assets including his Mar-a-Lago estate in Florida, his Manhattan penthouse, office buildings, hotels, and golf courses.
The case was placed on the docket of Judge Arthur Engoron, who determined the trial would be decided by him, without a jury – which at the time was not challenged by Trump. Before the trial began in early October 2023, on September 26 Engoron found the Trump organization liable for fraud, saying their asset valuations reflected a “fantasy world,” and finding “conclusive evidence” that Trump inflated his net worth by as much as $2.2 billion for which he received more favorable interest rates on loans and lower insurance premiums. The trial then proceeded to determine the amount of ‘damages.’
On February 15, 2024, the judge handed down his conclusion of a fine of $355M plus an additional $100+M accrued interest on the pretrial trial fine fraud and that since his ruling. Further, he ordered Donald Trump not eligible to serve on any corporate board for 3 years, and an appointment of an independent monitor to oversee Trump’s businesses.
In his 35-page judgement, Engoron wrote that Section 63(12) does not require the government to prove that financial losses were incurred or that the defendant acted with intention to defraud. The persistent submission of exaggerated financial statements itself satisfied the statute’s definition of fraud, and the inclusion of vague, unenforceable disclaimers “cannot be used to insulate fraud as to facts peculiarly within defendants’ knowledge, even vis-à-vis sophisticated recipients.”
Under the law the attorney general’s office has brought cases ranging from accusing three bus companies of violating New York City regulations on idling and accusing ExxonMobil of misleading investors about the business risks presented by climate change.
In my feeble mind the NY law seems to be wide open for the attorney general to bring to court any number of businesses and their activities without any party seeking restitution for those actions. I don’t get how anyone can be accused of fraud without anyone being defrauded. I certainly understand Bernie Madoff’s and Sam Bankman-Fried’s alleged frauds, but not this one.
As I understand it, the banks and insurance companies who were allegedly defrauded have no complaints. That the costs of all bank and insurance company loans have been paid on time. Prosecuting a crime and finding someone guilty thereof without a victim is foreign to me and sounds like government overreach, opening up litanies of potential, subjective harassment with major legal costs to defend against such an alleged “crime” by any company of the NY AG’s choosing.
It’s also noteworthy that the judge in this case found several 100’s of millions in liability above that being sought by the attorney general. I have no idea of the rationale for his judgements.
I do know this, I never want a criminal lawyer involved in the question of the true value of my house, for example, and that lawyer determining what I can list it for. The value of anything is what someone else will pay for it. I’m not guilty of fraud if I list the house at more than I might ultimately accept for it.
Whenever I have applied for and received a loan from a bank, my experience is the bank won’t lend me more than the collateral value it determines it will accept to cover the loan. If Trump received favorable loan rates based on an exaggerated value of his collateral, that’s on the banks and any risks it’s willing to take, not on Trump.
But there you have it – the NY law, the attorney general who brought the suit against Trump, and the judge and judgment in the case.
It would appear to me that not only will an appeals court negate part or all of the judgement, but in fact may find the NY law unconstitutional.
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Have a great and prosperous week.
Hug somebody.
References:
https://www.nysenate.gov/legislation/laws/EXC/63
SPIDER Bites
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