Fraudster Trump
The chickens are slowly coming home to roost.
Economist (unsigned) (“Donald Trump is found liable for fraud in his real-estate dealings“):
The purpose of a trial is to find facts and assign fault. But for civil lawsuits in which the evidence is unassailable, parties can ask a judge to skip the fact-finding and cut to the punishment. So it was in the fraud case brought by New York’s attorney-general, Letitia James, against Donald Trump in state court. On September 26th the presiding judge agreed with prosecutors that for years Mr Trump had misled lenders about the value of his properties in Florida, New York and Scotland to secure better terms on his loans. Inaccuracies of the kind unearthed by prosecutors and backed up with “indisputable” evidence, wrote Arthur Engoron in a withering judgment, “can only be considered fraud”. This was, he ruled, not a matter of “rounding errors or reasonable experts disagreeing”.
Mr Trump denies all allegations and will appeal against the ruling; his lawyer called it “outrageous” and “completely disconnected from the facts”. The process of appeal will probably drag out over years. But if the judgment is ultimately upheld, parts of Mr Trump’s business operation may be dismantled. Judge Engoron ordered the cancellation of corporate licences that enable the Trump Organisation to operate in New York. Mr Trump’s properties would come under the control of a receiver and “could be put up for forfeiture by the state”, says Catherine Christian, a lawyer at Liston Abramson and former prosecutor in the Manhattan district-attorney’s office. The decision, seethed Mr Trump’s lawyer, “seeks to nationalise one of the most successful corporate empires in the United States”.
[…]
The judge is not done with the case. He determined that several of the alleged offences—that business records were falsified, for example—warrant a trial. If Mr Trump is found liable again, there could be more penalties, which he will surely contest, too. Ms James wants to fine Mr Trump $250m and bar him from serving as a director of a corporation in New York. Her burden of proof is lower than if it were a criminal trial (he faces four of those, in federal and state courts, over separate allegations).
But Ms James has already won on the “big kahuna”, says Ms Christian. Not for nothing is the punishment that has been ordered by Judge Engoron known, in legal circles, as a corporate death penalty.
Maggie Haberman and Alan Feuer, NYT (“Ruling Against Trump Cuts to the Heart of His Identity“):
Nearly every aspect of Donald J. Trump’s life and career has been under scrutiny from the justice system over the past several years, leaving him under criminal indictment in four jurisdictions and being held to account in a civil case for what a jury found to be sexual abuse that he committed decades ago.
But a ruling on Tuesday by a New York State judge that Mr. Trump had committed fraud by inflating the value of his real estate holdings went to the heart of the identity that made him a national figure and launched his political career.
By effectively branding him a cheat, the decision in the civil proceeding by Justice Arthur F. Engoron undermined Mr. Trump’s relentlessly promoted narrative of himself as a master of the business world, the persona that he used to enmesh himself in the fabric of popular culture and that eventually gave him the stature and resources to reach the White House.
The ruling was the latest remarkable development to test the resilience of Mr. Trump’s appeal as he seeks to win election again despite the weight of evidence against him in cases spanning his years as a New York developer, his 2016 campaign, his efforts to overturn his 2020 election loss and his handling of national security secrets after leaving office.
[…]
The former president now faces not only the prospect of having to pay $250 million in damages, but he could also lose properties like Trump Tower that are inextricably linked to his brand.
[…]
In straightforward terms, Justice Engoron punctured Mr. Trump’s bubble of protective falsehoods about the way he conducted his business.
“In defendants’ world,” Justice Engoron wrote, “rent-regulated apartments are the same as unregulated apartments; restricted land is worth the same as unrestricted land; restrictions can evaporate into thin air.”
“That is a fantasy world,” the judge went on, “not the real world.”
David A. Graham, The Atlantic (“The End of Trump Inc.“):
The surprise is not that Trump and his co-defendants, including his sons Donald Jr. and Eric, committed fraud. What is surprising is that he could finally be punished for it—and quite harshly.
[…]
The greatest blow to Trump may be reputational and psychological. He has claimed that the case against him is political persecution, and some of his supporters will find that compelling, but being found to be a fraud is no more an advantage than being indicted is. Because Trump has gotten away with this way of operating for decades, his fantasy world came to seem almost real. The idea that a judge might actually punish him seemed remote—both to Trump and to his detractors.
Though the civil case in New York has no direct connection to Trump’s other legal troubles, Engoron’s ruling suggests that the courts are now catching up to a man who has long behaved as though there would never be any consequences for his deceptions. Trump has tried to convince Americans that he won more votes than Joe Biden, that the 2020 election was stolen from him, that he had every right to abscond with classified documents and obstruct the federal government from recovering them, and that he was the greatest president in American history. This is a fantasy world, but the real world has ways of intruding on it.
Given that it’s been pretty clear at least since 2015 that Trump routinely committed fraud—even bragging about screwing over people he did business with as a matter of course—it’s not obvious why this ruling would change anyone’s mind. Still, one can hope that, at some point, one of this rulings serves as a wake-up call.
If nothing else, the fines—not to mention the legal fees—are likely to be ruinous. One can’t imagine that his attorneys aren’t demanding cash up front at this point and I doubt Trump has $250 million in available assets.
Time to have a bake sale?
It won’t change the minds of the hardcore Republican Base, but it may chip away at those low information voters who pull the lever based on whims and impressions. I think there is a large part of the country that still believes Trump was some sort of genius businessman but if the opposition uses this to paint him not as a criminal but as a buffoon, it might be worth a couple of percent in key states. The attacks write themselves: “Donald Trump actually told a judge he was justified in claiming his apartment was three times bigger than it was on a loan application because the value of his “brand” multiplied everything he touched!”
As someone somewhere whose identity I can’t recall pointed out: Trump keeps leaving his assistants and abettors dangling when they need help.
But if Trump is in enough financial trouble to make it not just vanishingly improbable, but genuinely impossible, for him to bail anyone out, even the most delusional may start calculating that it’s better to do a deal with a prosecutor, in upcoming cases.
Do the creditors just sit around waiting on this? I had the impression the fraud finding is enough to trigger action.
@charontwo:
The Economist is a British magazine that relies on American stringers. In my view, its understanding of things American is uninformed and unreliable.
(I wonder how much the Trump Org will be allowed to shift stuff around while the appeals are going on).
@JohnSF:
Legitimate point, but I also have to wonder about what financial and real estate people were saying about him in the 80’s and 90’s: essentially that he was so fixated on the dollar in front of him and his desire to make it his, that he would screw up deals where he would have gotten much much more. More than that, it was his desire to “win” by screwing the other people at the table. The impression I got from the articles was that it wasn’t the attempt to screw his partners that bothered them, but rather that he would do it so early in the deal,thereby leaving so much on the table, and in such a blatant way, thereby ensuring those people would never work with him again. I came away with the impression that when it comes to money, Trump is a malignant miser incapable of seeing long term.
@Bill Jempty: Trump just needs to get a job and lay off the Avocado Toast and he can pay his $250 million just fine.
The message Trump will take away from this is that getting into politics was the worst mistake of his life (worse than Donald Jr.). Had he stayed in business, he could have kept floating on the cloud of his reputation; had he stayed on reality television, he would have a public image as a hugely successful business man. But no, he went into politics and it’s all falling apart. Nemesis is a real b**ch.
@Not the IT Dept.: Trump, by many accounts at the time, set out hoping to get at least into double digits in the 2016 primary in order to bolster his brand. Then he unexpectedly struck a chord with GOP voters and couldn’t bring himself to back out while he was winning. Many at the time, including me, said it was a mistake for someone with his reputation to call attention to himself, but he just couldn’t help it.
But say to himself in retrospect that he screwed up? No, I don’t think he’s able to do that.
@Not the IT Dept.: When you think about the low level schemes Trump was involved with before the Presidency, you have to wonder how long he could have kept things afloat. Licensing his name to Malaysian furniture manufacturers for petty cash? Trump wine? Trump steaks? For the past couple of decades or more, his “signature” hotels and office buildings have really just been him licensing his name to put on the building. As he has testified in depositions when some of these ventures failed, his only contribution was his name and he got the money for that up front.
The one exception was a few properties that he paid for in cash, like his Scottish golf club. No real developer would tie up so much of their capital in one purchase (god help me, I was about to write “not even Trump would be so stupid as to…”) so it there has always been speculation as to whether he is acting as the front for a money laundering scheme.
@charontwo:
With the caveat that this is not my bailiwick, I would guess so. The whole point of the receiver is to protect the value of the assets so they can be converted into cash for the State and his creditors.
Given how opaque his financing and “wealth” is there are likely to be wildly competing priority claims. I doubt NY is the first position on most of it. I suspect that’s why Trump is so freaked out by this. Even while the appeal is proceeding he’s going to start defaulting and that’s going to publicly expose him.
Like @MarkedMan: said, Trump is at his core a money laundering scheme. I mean most rich eccentrics (Musk, Thiel) have the bulk of their assets in relatively straightforward paper and real estate, anyone can get a mental handle on it. What the hell are Trumps actual assets? Who the hell are his creditors? Imagine the country getting its nose rubbed in the fact that the last president is “rich” only because the Saudi’s and Russians say so. Along with a dizzying breakdown of his corporate empire.
Also, watch of a continuing exodus of RWNJ companies fleeing NY, DE, IL, and CA for the living embrace of TX and FL. [laughter ensues]
@Beth:
Well…
NY judge in ruling on Trump organization fraud case:
@MarkedMan:
Incapable of seeing the long-term yes, not really miser, his reputation in financial circles was and is one of gross financial incompetence. His tendency is to cheat and stiff people, but then to bizarrely overspend as well (as he did to bankrupt the previously profitable Eastern Shuttle) – not the classic miser. I am not sure there is a proper word for him – PT Barnum without competence perhaps.
His one single area of competence is in marketing to the rubes – that is his PT Barnum animal cunning, and selling an image despite all facts. Operationally in operating businesses, financially he has proven grossly incompetent and short-sighted without any real strategy.
So in short, what you saw during his Presidency. Reality TV show faux executive, the pretence and image, like a soap opera star playing a Dr and deluding people into thinking he has real medical expertise (sadly not implausible analogy).
@Not the IT Dept.: Indeed although of course it presumes Trump is capable of learning lessons…
But it was indeed a gross mistake (certainly winning in 2016 was a gross mistake, he should have thrown the race).
To begin to understand the core motivations of the Cheeto, I think Fiona Hill’s observations from her time at the NSC. Her claim is that Benito cares the most about how he appears to others, which often means how he thinks he appears to other people.
We hear enough about this on the news to confirm Professor Hill’s observation, IMO. Recall how many times he complained something made him look weak.
Count in his many delusions, in particular about himself, and you begin to understand a little about his pathological nature.
@charontwo:
As I understand the theory behind the receivership thing, the answer for the top-level New York State LLCs is “not at all”. The New York Times is fond of pointing out that The Trump Organization is >500 interlocking LLCs created in various places and almost totally opaque in terms of who owns what. The court-appointed receiver is going to spend weeks/months working out who owns what.
Hypothetically, a New York LLC may own part of a Florida LLC that owns part of a California LLC that owns part of the Trump hotel in Las Vegas. The membership in the California LLC may have been accepted as collateral for a loan from a European bank. The loan may be callable under a variety of conditions, with follow-on effects. Cascading failures can be fascinating. Recall that in 2007-8 the Federal Reserve stepped in and paid face value for a whole lot of paper that was temporarily worthless in order to stop a cascading failure. Note also that the Fed unwound its holdings over years and made a profit.
IANAL, but assume the New York receiver has obligations to protect value up and down the ownership chain, not just to ensure dissolving the LLCs produces enough cash to pay the fine.
@Michael Cain:
That’s also assuming that NY is the sole priority creditor. Some of that ownership will be encumbered with “legitimate” secured claims that won’t be easy to just make go away.
The analogy I hit on early and have had little reason to reconsider is of a great white shark: excellent predatory instincts, tiny little brain. Predatory cunning is not intelligence, just as intelligence is not wisdom. Thankfully Trump is just a shark and not an orca. Orcas have the instinct and the intelligence.
Trump succeeded at politics by appealing to a previously under-served demographic: morons. As has been said, Trump is a poor man’s notion of a rich man, and a moron’s idea of a smart man. His core base is in the neither rich nor clever demo, the losers of a 21st century where the winners tend to be educated and intellectually adaptable. The thing about losers is that they know they are losers, expect to go on being losers, and will in fact engineer their own loss.
Trump keeps demanding someone, somewhere, somehow, rise up and save his pathetic ass. And he gets. . . crickets. MAGAts aren’t trying to win, they know deep down in their very souls that when they scratch that lottery ticket they’ll lose. And in that moment of defeat they are justified in their self-pity and are content. Another glorious lost cause.
One could almost pity them if they weren’t such creeps.
@Beth:
The stunning information is perhaps that a man with sketchy financial backers and sketchy finances would expose himself to the klieg lights and magnifying glasses that come with being a politician. President Icarus is discovering the hard way the sun is really hot.
@drj: That statement has a footnote. The footnote correctly says that this is less indicative of market value and more of influence peddling.
Here is a detailed rundown I came across:
https://plus.thebulwark.com/p/trump-civil-case-business?utm_source=substack&utm_medium=email
@charontwo:
Thanks.