Below is my column in The Messenger on the recent testimony of bankers in the Trump fraud trial. The testimony put the controversial demands of New York Attorney General James into sharp relief. The issue is not whether it is appropriate to fine businesses for under or over valuing property, but rather the nuclear option pursued by James in seeking effective dissolution of the company and a quarter of a billion dollars in penalities.
Here is the column:
“Curiouser and curiouser.” Those words from Alice in Wonderland seem the only apt description of the case unfolding in the New York courtroom of Justice Arthur F. Engoron over the alleged fraudulent practices of former president Donald Trump, his family and his business.
The charges brought by New York State Attorney General Letitia James were curious from the start. James had run for office on the pledge that she would hunt down Trump, a promise that apparently thrilled many New Yorkers. However, she brought a civil case based on Trump over- and under-estimating the values of his properties.
As some of us have previously stated, there do appear to have been assets that were inflated or deflated in value. That may be a common practice in New York real estate, but it is not a good practice. Indeed, I believe a penalty is warranted for such practices, but those should be uniformly imposed and would be a fraction of the fortune sought by James in this case.
The evidence shows that banks made money on these loans, which were paid off either early or on time. In fact, none of the banks complained about the Trump organization’s estimations, which were accompanied by a warning that the banks should not rely on those estimates.
Moreover, James is seeking to kill a corporation once viewed as iconic in New York, not just by denying the certificates for the Trumps to do business in the city but by imposing $250 million in penalties for money that no one actually lost.
That all became curiouser this week when two bankers were called by the defense. Rosemary Vrablic and David Williams worked on Deutsche Bank loans to the Trumps for years, and they testified that the banks made millions and viewed Trump as a much-sought-after “whale” client — what Vrablic described as a “very high net-worth individual.”
Williams testified that net worth is “subjective” in such documents as property valuations and are offered as mere “estimates.” It is not uncommon for a bank’s estimates to differ from a client’s.
Vrablic wrote emails at the time about the benefits to the bank in dealing with the Trumps, as well as pitches to the family that the bank was happy to extend conditions which allowed added benefits of “flexibility, rate and service” to get the business relationship.
Justice Engoron seemed irritated by the testimony, however, and when Trump counsel asked why the bank was so eager to secure future loans, Engoron snapped back: “They’re trying to make money. Why wouldn’t they be interested?”
The real question here is James’ overriding interest in killing the company. Engoron has already declared that Trump is guilty of fraud, and he is now weighing the massive penalties sought by James — and eagerly supported by many New Yorkers.
That eagerness could prove the court’s undoing, however. Some of Engoron’s earlier orders are currently under review. Yet it is James’ demand for the effective dissolution of the corporation and $250 million in penalties that could push this case beyond the curious to the unconstitutional.
It is relatively rare for civil damages to trigger constitutional review, and it is still far from clear that this case will rise to that level. The New York law is unique in allowing massive penalties without the loss of a single dollar by a bank. However, James wants dissolution and crippling damages, and that could trigger a higher-court review.
In 1996, the U.S. Supreme Court decided a case, BMW of North America v. Gore, striking down a punitive damage award. The case involved the practice of the company to repair and repaint cars damaged in transit without telling the customers. The jury in the original trial awarded $4,000 in compensatory damages for the lost value to the car in not having a factory paint job and other damage; it then imposed $4 million in punitive damages for the company’s dishonesty. Even though the Alabama Supreme Court previously reduced the punitive award by half, the U.S. Supreme Court still found that the award violated the Due Process Clause as “grossly excessive.”
While the High Court agreed on the need for punitive damages to deter future misconduct, it found the ratio between compensatory and punitive damages to be too great.
One distinction between that case and the Trump proceeding is that the Supreme Court found no intentionally false statements by BMW — but effective dissolution of Trump’s business and a quarter-billion dollars in damages may raise analogous concerns over excessive penalties.
In the Trump case, the banks made money. It would be akin to the car owner’s value going up with the paint job but still hitting BMW with punitive damages.
James is known for her embrace of nuclear options when it comes to political opponents or groups. She previously sought to persuade a court to force the dissolution of the National Rifle Association. The question is, what happens if she finally has found an enabling judge in Engoron?
The testimony of the bankers highlights how out of proportion this effort has become. One would expect the banks to have sought action as the aggrieved parties if they had suffered losses as a result of Trump misconduct. They did not. While they discontinued working with the Trumps after the start of the New York criminal and civil actions, they have remained silent.
It all reminds one of another great work. In Sir Arthur Conan Doyle’s story, The Adventure of Silver Blaze, Sherlock Holmes investigated the disappearance of a racehorse. Holmes noted to the local inspector “the curious incident of the dog in the nighttime.”
When the inspector objected, “The dog did nothing in the night-time,” Holmes replied: “That was the curious incident.”
The lack of any barking by the banks is just another curious element in a case against Trump that gets curiouser and curiouser.
Jonathan Turley, an attorney, constitutional law scholar and legal analyst, is the Shapiro Chair for Public Interest Law at The George Washington University Law School.
NYC did that with rent control causing prices to become unaffordable in Manhattan. You are correct, they are doing it again
“Indeed, I believe a penalty is warranted for such practices,”
Professor, I find it hard to believe you said this. The value of something is what someone is willing to pay for it. I live in such an area and am astounded at the prices paid. I know the market and its history, yet my estimations have been off by 2-3 fold in the property I am involved with, and the price increases seem like they are not ready to stop going higher.
With great trepidation, I can only say your comment is lawless, at least in terms of classical economics.
S. Meyer, two for two already today! Keep up the good work.
Does anyone remember “Beanie Babies”? I don’t recall how much they sold for but it eas probably in a range under $15.00. Currently, the rare “Peace Baby” is available on Etsy for $50,000, though Thanksgiving has already passed, rest assured it will return next year and “Beanie Baby collectors can get “Gobbles” for $6,500 on the Poshmark website, while the rare “Teenie Beanie” “Erin” is available on Poshmark for a mere $2,800, also available is and, if one doesn’t have a load of cash to expand their prized collection, the Princess Diana Beanie Baby “Os” can be had on Poshmark for $225 – down from $350.
There are people who want to acquire such a thing, and are willing to pay such prices for a small stuffed toy that is difficult to find and considered rare in the “Beanie Baby” collectors world, but desired by them to embellish their precious assemblage of “Beanie Babies”. To them, it’s worth the asking price, and if they’re considered a whale in the banking world, they may even be able to get a bank to lend the money. Heck, even the dark alley loan sharks would likely be willing to front them the money.
I suppose most of these items for sale are grossly overpriced, but I’m not a collector of such things. If my interest were piqued enough, and had enough spare cash lying about to expand my much cherished and highly valued caboodle, I might be inclined to send the exorbitant amount asked for something that I realize is overvalued.
Salty, I got a lot of presents in scotch, including some 25-year-old. I drank the less costly brands I liked but gave my friends the good stuff, which is now finished. Those expensive bottles in the two-hundred dollar range weren’t worth it but for their name and status. I later found out from my local liquor store that my exceptional McCallan 25-year-old special reserve was worth $3,500 on eBay. I felt sick for a few seconds as I couldn’t even remember what it tasted like. I didn’t drink it. I felt a bit better when he told me the 25-year-old Pappy Van Winkle bourbon I bought for $75 could be sold for $2,500. Unfortunately, I had already drunk it all by myself.
Are those prices accurate? I don’t know, but if I took a loan out using both those bottles for collateral, would Judge Erdogan the Stupid tell me and the liquor store that we were committing fraud? This is what disappoints me about Professor Turley’s logic. The price is whatever one is willing to pay. $75 for Pappy Van Winkle was my max.
I bought a $600 bottle of Whistle Pig that is now worth over $3k. I too drank it, but the empty bottle is worth $1500.
My 1965 Mustang Fastback, which sold new for $2350, and that my dad paid $100 for and which I sold for $15k, is no worth about $30k.
You know what you have when there are 4 Engorons in a room? Morons.
Nerves of steel is not something I possess. I think of a song that was popular some time ago that said you gotta know when to hold ‘em and know when to fold ‘em. I only play penny poker so I’m safe. I’d be in trouble with the mob otherwise.
I’m with you on the max I’m willing to pay and tend to consider a price too high to be for those who are willing to pay a price too high. I’m not in that crowd. Who would pay more than they can afford to lose other than a broke gambler? The old saying my grandmother frequently visited comes to mind-something about a fool and their money-it’s is something I try not to reflect. Sounds like you’ve retained your wisdom through some nice scotch sipping. Cheers
How about the value of a hunter biden painting
I wouldn’t buy one even if I could afford it. Nothing the biden family does for that matter. Very little of what they do is likely legal or moral.
“Give me the man and I will give you the case against him” (Polish: Dajcie mi człowieka, a paragraf się znajdzie; translated to English more literally as “give me the man; there’ll be a paragraph for him”, Russian: Был бы человек, а статья найдется, also translated as “give me the man, and I will find the crime [for him]”, or “show me the man and I’ll show you the crime”) is a saying that was popularized in Poland in the period of the People’s Republic of Poland, attributed to the Stalinist-era Soviet jurist Andrey Vyshinsky,: 200 or the Soviet secret police chief Lavrentiy Beria. It refers to the miscarriage of justice in the form of the abuse of power by the jurists, who can find the defendant guilty of “something” if they so desire. The saying is related specifically to the concept of the presumption of guilt.: 179 : 85 “
From Wikepedia today. 12/3/2023
I think that this pretty much sums up the Attorney General’s case and the presumption of guilt. Already a constitutional violation by presuming guilt.
We live is a capitalistic society where the object is a free market and making money. Where is the crime here? As many have already stated, the Trumps and the Banks did not complain or feel aggrieved. Trump and his family made no bones about the fact that they were selling their “brand” and did in fact sell it out in the open and made money off of it. Great for them. That takes nerves and knowledge and bluffing and deal making which, most of us are incapable of doing or even unwilling to do, not because it’s illegal but because we would be emotional or nervous wrecks.
It would do that to me. I like straight forward work with pay and simple things like savings accounts, CD’s, IRA’s and 401K’s and investing that is managed by other and better people in finance. I hire them so I don’t have to do the nerve wracking deal making.
This is the way our system works, in contrast to our present president who works in the shadows and sells his abilities to get around rules, favor people who pay him and his families bribes and ignores the fact that he is serving and representing the people’s interest and often works to the detriment of the people he is supposed to protect and defend.
Every Person knows the ENTIRE Democrat Party are Fascists…using Government and business to DESTROY opponents and ENRICH THEMSELVES
Time to have a Nuremberg trail to jail the thousands of criminal Democrats from across government!!!
it is like 1930 Fascist Germans or Italians are running America
Letitia James is our own little Roland Freisler.
time to start jailing the thousands of criminal democrats from across Government…for their CRIMINAL ACTIVITIES!
Start with the Russian Hoax, then everyone that protects Bidens, Pelosis, Clintons, Obamas, etc
I would revise your column Prof. Turley to “Corrupt and Corruptier”. This whole thing is outrageous, study the French Revolution to see where double standards of justice take a country.
I would suggest that high estimated valuations of non-liquid assets is common nationwide, and not limited to New York. But there was one curious statement by the banker Mr Williams who stated that the bank “routinely discounts the estimates provided by the client” on their loan applications, sometimes by as much as 50%. This tells me that their loan committee makes their decisions with foreknowledge not to rely solely upon the statements of the loan applicant.
Additionally, there ere multiple methods of valuing non-liquid assets like real estate, all of which are legitimate and acceptable to appraisers and lenders: Estimate of construction cost less depreciation, Current income generated by the property, and Comparable sales method. Each works well, but usually one works best, depending upon the property. Incidentally one method of property valuation that is NOT acceptable to lenders is ad valorem tax statements.
Why the State of New York has an interest in pursuing this case has become obvious: The Attorney General is on a personal political vendetta.
New York State Attorney General Letitia James’s mission drift is not unexpected, the objective is still the same – Put Trump Our of Business (Economic Emasculate Him) and put him behind Bars (Showtime).
– 𝐀𝐒 𝐈𝐅 𝐓𝐇𝐀𝐓”𝐒 𝐆𝐎𝐈𝐍𝐆 𝐓𝐎 𝐌𝐀𝐓𝐓𝐄𝐑 –
She is now trying to kill two Birds with one Stone (Engoron). #1 As referred to above, and #2 Save Herself from Her own Missives.
The ‘Horns are Locked’, it’s Her prosecutorial gamble at stake. My gut says, Engoron will walk lock-step along with the program the Dem’s have set forth.
And with all that’s going on in the World Today, it says to me that the 𝐒𝐓𝐀𝐓𝐄 (Worldwide – No need to label/libel a Group) is repressing and coercing the Humans of this Planet into the Chains-of-Subordination.
Freedom as you conceptualize it is dead, Constitutionalism is dead, Communism is Dead.
It is the New World Order of the 𝐒𝐓𝐀𝐓𝐄.
[If you have to: Deep-STATE, But it’s the 𝐒𝐓𝐀𝐓𝐄.]
I’m not real religious, however on occasion I have to say:
𝐆𝐨𝐝 𝐒𝐚𝐯𝐞 𝐔𝐬 𝐀𝐥𝐥
“The charges brought by New York State Attorney General Letitia James . . .”
A “prosecutor” who ran a campaign of “get Trump,” using a “law” that is nonobjective and that nobody understands, in front of a politically motivated “judge” who is a laughing stock — over a *civil* case in which none of the parties to the transaction claim harm or damages.
The entire case is a farce. But, then, that’s the point. First the absurdity. Then the atrocity.
(Go ahead. Try to argue that somehow NY taxpayers were “harmed.” To do so, betrays an ignorance of this absurd case.)
Our nation is in dangerous waters and we are responsible for putting those at the helm. It’s now time for us to replace them before the ship we’ve built sinks.
Judge Engoron is performing brilliantly for New York Attorney General James and if ultimately successful, will be nominated by Lunch Box Joe for the Congressional Medal of Freedom for “saving democracy”. Sound about right Jonathan ???
@Turley,
One other thing to consider.
The statute 63(12) says that fraud occurred if Trump’s ‘misrepresentations’ were done to seek better terms.
What happens if/when the better terms were extended not due to misrepresentations but for other considerations?
Trump was described as a ‘whale’. They testified that they extended consideration to Trump based on their history with him along with other factors like his ability to bring in additional business. That’s the hole in Jame’s case.
As you have pointed out in the past… the fact that the bank made money wasn’t the issue… but that here, the statute is blind to other factors that could have led to the benefits instead of a misrepresentation made by Trump.
-G
The problem is, Engiron isnt going to rule based on the facts. He has shown his colors and made past statements regarding his willingness to step outside the law. These proceedings are a farce. He has already decided. Trumps only hope is appeal.
Why would he let pesky little things like facts to get in his way? Facts aren’t stubborn things in New York.
@Turley,
I’m sure you’ve read 63(12).
While its vague, I suggest you go back to the statute’s definition of fraud.
Here’s the problem that James and Engoron face.
1) The bankers testified that they didn’t use Trump’s numbers. He estimates what? 4Billion? and the bank set the estimate to what 2Billion?
2) They also testified that they considered external factors when extending loans and other considerations to Trump due to the add on effect since he was a “Whale”.
But if you read 63(12), where is Trump’s fraud?
The bank didn’t rely on either his estimate, or his statements. So no fraud was committed.
Engoron will probably not face an issue if Trump raises a judicial misconduct against him. (Liberal judges and all)
James should face prosecutorial misconduct. Trump would have grounds for a lawsuit against James and the SDNY over this.
(I think we all agree that this will end up being tossed on appeal.)
If Trump is re-elected… what would the odds be that she and possibly Engoron face election interference charges?
-G
It is absurd to think that DB was deceived by Trump’s valuations of his properties. DB formed its own view of the values of the properties and Trump’s creditworthiness and made the loans. They were repaid in full, on time and with interest. This is a political hit job, nothing more.
shouldn’t we have jailed EVERYONE on wall street in 2008…when EVERYTHING was VALUED wrong?
Anyone at Silicon Valley bank got to JAIL…for THEIR ACTUAL FRAUD? Where politically connected people were GIVEN billions THEY WERE NOT legally entitled to? First Republic…same?
Excellent point. Our whole system is a steaming pile of total BS as you compare these two issues.
@Daniel,
Yes, that’s obvious.
The issue though is how James and Engoron are able to continue this charade w a straight face.
Engoron faces no blow back when this goes to appeal.
The bankers testimony sunk the case.
Turley has said that the statute doesn’t need to have a victim or a loss. The mere misrepresentation on a form is enough to allow James to bring forward a lawsuit.
I have to question that because that is an incorrect interpretation of the law.
-G
In what kind of country can a candidate for Attorney General specifically target an individual for prosecution during the campaign? I understand a candidate could pledge to stop organized crime in general, but to target a person who had not been convicted of any crime seems outside the bounds of the office sought. Trump did call Clinton “crooked Hillary” and said he would investigate her 20K deleted emails, but then did noting in that realm. James is taking the role of the Spain’s Grand Inquisitor.
This case has not gone curiouser, it is exposing the pure breakdown of our political and judicial system when it comes to taking down Trump. You know democrats have truly lost their collective minds when James Carville rants evangelicals and traditional Catholics are more dangerous than Al-Qaeda. The same holds true for their views of Trump. Carville believes at least half the country is worse than terrorists who celebrate murder and rape. How do you compromise with bigots like that?
You don’t compromise with these racist bigots and criminals…..you eradicate them like one would vermin.
racists…you mean like DEMOCRATS who BELIEVE ALL BLACK people are incompetent and need Affirmative action, money, etc
can you define a “hate crime”? Is that where a special class of people RECEIVE MORE justice than normal people? I thought Justice was BLIND.
Any word on your BELIEF about letting millions of ILLEGALS steal billions?
Nearly everyone that has refinanced their mortgage is guilty of this same “fraud”. I used the Zillow estimate last 2 times I refinanced, both times it was high. I would bet the corrupt judge, his corrupt staff, the corrupt prosecutors, and the corrupt DA have all committed this “fraud”.
Another thing to note, the DA is guilty of this fraud in this case. She tweeted that the value of Mar-a-Lago was based on the tax assessed value. This value is a severe underestimate. Why isn’t she being prosecuted?
@Anon,
I believe it was the judge who made that determination.
Using the tax assessment even after the assessor’s office told the court that the value from the tax assessors office didn’t reflect true market value and that it shouldn’t be used in that manner.
While that’s not ‘fraud’ per se, it strengthens Trump’s appeal.
The court misrepresented the value of Mar a Lago by over 1000% while Trump’s estimate of his own wealth was off from the banks where they cut his estimate by 50% )
-G
She’s not being held accountable because the leftist have put a heck of a lot of balls in the air for Trump to juggle. He’s kinda busy, what with running for president, and add all the balls they’ve put out there which he’s juggling in addition; but that’s not going to distract him from his main objective, becoming president again.
I suspect he’ll get to the bottom of the leftist tactics at some point. They know good and well that there are people who will believe some of the things the leftist have alleged despite the fact most people understand what they’re doing. The main thing the leftist desire is for a decrease in Trump votes because some people will actually think the leftist allegations are true and Trump is actually a crook.
Much like advocacy journalism, advocacy academics, and advocacy corporations – it is long past time for legal professional insiders to stand up and call out the corruption of advocacy justice – their profession.
@Anon,
Its a bit more complicated than that.
You have commercial real estate where you don’t have ‘comps’ that would be comparable.
You relied on Zillow which does the comps. You could have hired someone to inspect your home and to provide an estimated value… neither would have made any difference.
The question is if your ‘fraud’ (estimation) resulted in the bank extending your better terms or other consideration.
That’s the problem w the case.
Trump got better terms and consideration because he was ‘Trump’ aka a ‘whale’. Not for his estimations of his net worth.
The bank’s testimony sinks the case except that Engoron will ignore it.
-G
This comment is irrelevant. if CRE estimates are more difficult because there are no comps there should be wider latitude in making an estimate. Residential real estate is easy because there are comps everybody commits fraud.
This case is not curious. It is outrageous. A prosecutor who ran for office on the promise of hounding and corralling a single individual is enough to make it clear that this case is nothing but political persecution and an abuse of official authority. Letitia James is the one who should be on trial and the judge should be her co-defendant.
The post claims the overvaluing is wrong. Uh? First, value and price are different. $10,000 hand bags are overvalued. It is impossible to claim the value is anywhere near $10,000. That means the Govt has the power to sue, and penalize private transactions. Based on nothing, other than they have the power.
Our entire system of Justice assumes the accuse is innocent. The burden, the extremely heavy burden on on the govt.
This is raw abuse of govt power.
Nope. As a general rule, price and value are the same thing. If people are actually paying $10,000 for a handbag then that is its value, and if you report it in your inventory as worth only the $200 that is the most you would dream of paying for it then you are committing a fraud. The only way price and value can be different is if nobody is actually paying the sticker price. If the market for some item is one where everyone gets a “discount”, then the sticker price is indeed more than the value, and is published only so that people can feel good about getting a bargain and not notice that they still spent a fortune. In such a case the value is the sticker price minus the standard “discount” that everyone gets.
This case will scare even more businesses away from New York. What company in their right mind would want to do business in such an anti business environment? Take the threads of this fabric apart, one at a time. Soon, there will be no money to fund the communists’ projects.
Further, this illustrates how this case and others like it, are nothing more than a witch-hunt. Did we not codify some of these harsh lessons of Salem into our legal system? Yet, here we have thrown out the basic tenets of justice.
How bizarre these agencies and government institutions have become. It is shameful.