Below is my column in The Hill on the $355 million verdict against Trump and his corporation in New York. The damages in my view are excessive and absurd after the court acknowledged that no one lost a dime in these exchanges. Indeed, the “victims” wanted to do more business with Trump and made handsome profits. New York Gov. Kathy Hochul has rushed to assure businesses that there is “nothing to worry about” after the corporate public execution of Trump and his company. The assumption seems to be that you have nothing to fear from confiscatory actions unless you are Trump in New York. That is precisely why the New York Court of Appeals should act to redeem the integrity of the legal system by setting aside or drastically reducing this award.
Here is the column:
In laying the foundation for his sweeping decision against former President Donald Trump, Judge Arthur Engoron observed that “this is a venial sin, not a mortal sin.” Yet, at $355 million, one would think that Engoron had found Trump to be the source of Original Sin.
The judgment against Trump (and his family and associates) was met with a level of unrestrained celebration by many in New York that bordered on the indecent. Attorney General Letitia James declared not only that Trump would be barred from doing business in New York for three years, but that the damages would come to roughly $460 million once interest was included.
That makes the damages against Trump greater than the gross national product of some countries, including Micronesia. Yet the court admitted that not a single dollar was lost by the banks from these dealings. Indeed, witnesses testified that they wanted to do more business with Trump, who was described as a “whale” client with high yield business opportunities.
Undervaluing and overvaluing property is a longstanding practice in New York real estate. The forms submitted by the Trump organization cautioned the banks to do their own estimates and the loans were paid in full and on time. Yet, the New York law used by James is a curiosity because it does not actually require a victim. Indeed, everyone can make ample profits and still allow for an investigation into “repeated fraudulent or illegal acts.”
Having campaigned on bagging Trump on any basis, James turned the law into a virtual license to hunt him down along with his family and his associates.
Engoron proved the perfect judge for the case. The opinion itself seems almost cathartic for the jurist who struggled with Trump inside and outside of court. In the judgment, Engoron fulfilled Oscar Wilde’s rule that the only way to be rid of temptation is to yield to it. He ordered everything short of throwing Trump into a wood chipper.
The size of the damages is grotesque and should shock the conscience of any judge on appeal. Even if the Democrat-appointed judges on the New York Court of Appeals were to ignore the obvious inequity and unfairness, the United States Supreme Court could intervene.
State courts tend to get a significant amount of deference in the interpretation of their own laws. After all, if New York wants to turn Wall Street into a remake of “The Hunger Games,” it has only itself to blame as other businesses flee the state.
The impact on New York business is likely to be dire. New York is already viewed as a hostile business environment, with the top end of its tax base literally heading south as taxes and crime rises. This draconian award is only going to deepen concerns over the arbitrary application of the law by figures like James, who previously sought to disband the National Rifle Association. (She has shown less interest in cracking down on liberal organizations like Black Lives Matter or the National Action Network of Al Sharpton despite their own major financial scandals.)
As James gleefully uses this law to break up a major New York corporation, it is hard to imagine many businesses rushing to the Big Apple. This follows Democratic politicians such as Rep. Alexandria Ocasio-Cortez (N.Y.) campaigning against Amazon seeking to open new facilities in the city. After this week, drawing new businesses to the city is going to be about as easy as selling country estates during the French Revolution.
The one hope for New York businesses may be the U.S. Supreme Court. Despite the deference afforded to the states and their courts, the court has occasionally intervened to block excessive damage awards.
For example, in 1996, the justices limited state-awards of punitive damages under the Due Process Clause of the Fourteenth Amendment. In that case, BMW was found to have repainted luxury cars damaged in transit without telling buyers.
An Alabama jury awarded $4,000 in compensatory damages for the loss of value in having a factory paint job, but then added $4 million in punitive damages. Even when the Alabama Supreme Court reduced that to $2 million, the U.S. Supreme Court still found it excessive. Even liberals on the Court such as John Paul Stevens and Stephen Breyer agreed that such “grossly excessive” awards raise a “basic unfairness of depriving citizens of life, liberty, or property, through the application of arbitrary coercion.”
The court may find almost half a billion dollars in damages without a single lost dollar from a victim to be a tad excessive.
That prospect will not dampen the thrill-kill environment in New York this week. In electing openly partisan prosecutors such as James and District Attorney Alvin Bragg, voters have shown a preference for political prosecutions and investigations.
In “Bonfire of the Vanities,” Tom Wolfe wrote about Sherman McCoy, a successful businessman who had achieved the status of one of the “masters of the universe” in New York. In the prosecution of McCoy for a hit-and-run, Wolfe described a city and legal system devouring itself in the politics of class and race. The book details a businessman’s fall from a great height — a fall that delighted New Yorkers.
It is doubtful Trump will end up as the same solitary figure wearing worn-out clothes before the Bronx County Criminal Court clutching a binder of legal papers. But you do not have to feel sorry or even sympathetic for Trump to see this award as obscene. The appeal will test the New York legal system to see if other judges can do what Judge Engoron found so difficult: set aside their feelings about Trump.
New York is one of our oldest and most distinguished bars. It has long resisted those who sought to use the law to pursue political opponents and unpopular figures. It will now be tested to see if those values transcend even Trump.
Jonathan Turley is the J.B. and Maurice C. Shapiro Professor of Public Interest Law at the George Washington University Law School.
This whole affair is so sickening, that I can hardly comment. It reminds me of those places in the Southern States, where a person could not get justice if the folks in power did not like the color of your skin. Trump has become Tom Robinson from To Kill A Mockingbird, E. Jean Carroll is Mayella Violet Ewell, with the only character change being Robert E. Lee “Bob” Ewell becoming the Judge.
Judge Engoron? Yes judge him harshly. He’s a clown in a black robe.
The courts and most of America is sick of Trump committing fraud and when he’s caught there is a fine which is less than the amount of the fraud. That has never been enough to change his ways of doing business. He still employs the same sketchy accountant as CFO. He still cheats massively on his taxes. How much of a fine would it take for Trump to bring in a real auditor to go over his business practices and get them on a legitimate path? I fear even this penalty is not enough.
“when he’s caught there is a fine which is less than the amount of the fraud”,,,,ahhh, So how much. exactly. WAS the $$ amount of the fraud?? There wasn’t one, because the banks did not suffer any loss, in actuality it/they gained a profit. Nowhere in the case did either the prosecutor or the judge say ‘ because Mr Trump caused XXX$$$ to be lost by anyone, he should be fined etc.’ The only harm was to the sensibilities of those that hate the man.
Sigh. We are already in a civil war. This time the bullets are dollars and information being shot by aristocrats, politicians, and lawyers. No one with a brain thinks this ruling was about anything but bankrupting someone out of fear, hatred, and the threat they pose to their status quo. They do not want a free and fair society, and this is one of the most egregious examples yet. I really hope the higher courts do the right thing, and I hope New York gets to reap what they’ve sown with their madness. The Spanish Inquisition was more sane.
James,
The Spanish Inquisition was more fair.
@Upstate
No doubt. And I must say assuming the pop-up trolls today are not following a script, the sheer ignorance of actual law of any kind, from SCOTUS to the mundane, on the left, explains a lot. No knowledge, logic, or sanity, or fairness. Just none. Like rabid dogs. It’s the kind of tunnel vision ignorance that destroys societies *for everyone*.
And the Grand Inquisitor dressed a lot better.
https://www.law.com/newyorklawjournal/2023/11/03/citing-real-world-threats-to-staff-judge-engoron-issues-narrowly-tailored-gag-order-for-trump-lawyers/?slreturn=20240119102129
@mespo
😂
No one with a brain thinks this ruling was about anything but bankrupting someone out of fear, hatred, and the threat they pose to their status quo.
James, those applauding this decision would find themselves applauding the assassination of Alexei Navalny in Russia. Oh, but that’s different, right? This is about justice. No one is a above the law. Yada, yada, yada. In Russia, that was protecting the Regime. Here, it’s protecting democracy. The reality is the Regime in control in the United States is less than one election cycle away from operating more openly like the Regime in Russia. Just watch them. If Trump somehow survives their political “assassination” and secures the nomination, we will see the Regime pull out all the stops.
Last week I watched the three part series called “Sons of Liberty”. I watched it thinking who of today filled the shoes of persons in the series.
Judge Arthur Engoron was one of the characters, and so was Donald Trump.
See United States v. Bajakajian, 524 U.S. 321. “We now hold that a punitive forfeiture violates the Excessive Fines Clause if it is grossly disproportional to the gravity of a defendant’s offense.”
Ya think?
Finally a reference to the Eighth Amendment and Bajakajian
Good find. This has not been applied much and I don’t know if it’s been applied to a state law judgment. Still, it seems right on point.
I still wonder whether Trump will be able to post a cash bond before appealing, which someone else said is required. Raising that amount of cash quickly might be difficult. I don’t know if there is a procedure for a stay.
Kauffman, you are right on point. The precedent is obvious, the Constitution is clear and this case is an egregious example of why both the 8th A and the prior case exist.
-Not totally convinced that Bajakajian is that relevant. This case does not appear to involve in rem punitive forfeiture.
Much of Engoron’s Order characterizes the awarded amounts as “disgorgements” of ill-gotten gains (e.g., equal to the amount of interest on the loans that Trump, et al. saved) rather than “punitive” or compensatory per se. ?? (The “ill-gotten” gains were the lower interest rates.) In other words, equitable disgorgement leaves the defendant in the position he would have been in, but for the wrongdoing. So, in this case, much of the award represents the exact dollar amount of what Trump, et al. would have paid in interest on the loans, BUT FOR his alleged misrepresentation of assets value.
It does not appear to be, e.g. akin to ‘treble damages’ or other form of punitive action.
Am I making sense here?
(and p.s., Engoron appears to be a vindictive, retaliatory little twit, –so it’s not that I’m deferential toward him or the ORder.)
Lin, I assume you mean the difference between the actual interest rate on the loans and the rate the bank would have charged had it valued the assets correctly. So not only did Engoron substitute his judgment about the value of the assets but also speculated about the appropriate interest rate the bank would have demanded on the basis of correctly valued assets. Quite a business genius!!!
Daniel: I don’t think that Engoron substituted his own judgment ( a common accusation here) but rather, —in a biased fashion, relied on valuations and savings as ascertained by Plaintiff’s “experts,” e.g. McCarty.
Indeed, in the Order, Engoron defends,
“Different Appraisers, Different Appraisals
Yet another great red herring in this case has been that different appraisers can legitimately and
in good faith appraise the same property at different amounts. True enough, as appraising is an
art as well as a science. However, the science part cannot be fraudulent. When two appraisals
rely on starkly different assumptions, that is not evidence of a difference of opinion, that is
evidence of deceit ” (p.77 of Order)
and,
“Materiality
In its summary judgment decision, this Court already found that the SFCs from 2014-2021 were
false by material amounts as a matter of law. NYSCEF Doc. 1531…” (same page)
(I do not know if Engoron “speculated about the appropriate interest rate the bank would have demanded on the basis of correctly valued assets.” I would have thought that needed to be presented by testimony. I of course did not read all of the 92 pages!)
Well, two large and sophisticated counterparties came to an agreement about a loan. In getting to that agreement the bank made an assessment of Trump’s ability to repay the loan with interest, based on its view of his assets, earning capacity and any collateral provided. It did not rely on Trump’s assessment of his assets. In choosing one expert’s view over another’s, Egoron substituted his judgment for Trump’s and the bank’s.
Yes, that is what I said above, that “Engoron…in a biased fashion, relied on valuations and savings as ascertained by Plaintiff’s ‘experts,’ e.g. McCarty.”
Clearly it was a private contractual agreement inuring to the benefit of both parties, and could/should be viewed within those four corners (notwithstanding the rights of bank shareholders, if things went wrong; -they did not).
If anything, I DO think an appeal is warranted. This could easily have been settled with a compromise on assets value, and Trump simply paying the difference (if any). Instead, as I said, a vindictive and showcasing Engoron chose to employ the state’s assessments of value, and punish Trump, et al..
Notwithstanding, as noted in the Order, some of the alleged violations (e.g., P.L. 175.45) (“using false statements in business” transactions) are “stand-alone” ones that do not require a showing of intent, scienter, or RELIANCE. So also, the earlier summary judgment under Exec. Law 63(12)
So, bottom line, for me. Yes, I believe Engoron unabashedly, vindictively, and deferentially relied on the State’s valuation(s)…If there were ever a ‘wrongful intent,’ I believe it was his. And I believe that the matter is worthy of appeal.
Second, I know nothing of NY practice, but in other states, since valuation is key, and this is a civil fraud case, the court might have tried compelled arbitration/mediation first, prior to entering an adjudicative Order? I also mentioned to Floyd that, like in an arbitration/mediation settlement, “intangible asset valuation” might be added when considering the value of a “Trump property,” as opposed to “comps” based on other area properties.?
(“state’s valuation”–assuming it was provided by state’s evidence; as I said, I did not read the whole shebang.)
lin– thank you for your thoughtful analysis. Although the New York law apparently was enacted in the mid-1960s, consumer protection laws of this type which many states enacted in the 1970s were intended to protect the “ignorant, unthinking and credulous” so that the state and in some cases individual consumers would have meaningful tools to punish and therefore prevent unscrupulous practices on ordinary people by predatory businesses. The common law required proof of reliance by the consumer and in many cases intent by the wrongdoer which legislatures viewed as too onerous in consumer cases. Even during that pro-consumer time, I am not familiar with any instance in which so large a penalty was extracted from any person or business when there was no proof that anyone actually lost anything, and those who supposedly were victims actually spoke out in favor of the person being prosecuted. As a state prosecutor, I sued General Motors for falsely advertising that its Oldsmobile automobiles had “Rocket 88” Oldsmobile engines when in reality GM had substituted Chevrolet engines due to a shortage. Experts would have testified that the Chevrolet engines actually were better than the Oldsmobile engines. We agreed to a change in advertising but no penalties.
IIRC, that Rocket 88 engine got maybe 8mpg.
To kauffman1948, Daniel, HullBobby, Lin, honestlawyermostly, and Floyd,
Thank you for a most interesting line of analysis and comments.
This is the reason why to come to the good professor’s blog aside his writings.
Floyd: I remember my first ride in a Lamborghini (sp.?) (Latter 1980s-early 1990s?)
If I had been wearing a wig or dentures, I would have been disgorged of both.
honestlawyer: And thanks for taking the time to help me flesh some of this out.
I clearly believe that James/the State racked their brains to fashion a c/a grounded in equity rather than restitution, turning to disgorgement in order to survive/circumvent a showing of victim/reliance (inapposite to/with your GM case, representing John Q. Public).
But even that (disgorgement) requires that the asset valuation be false, albeit not intentionally. I don’t even see where the bank(s) did their own due diligence, but rather accepted the SFCs submitted by defendant loan applicants? (the SFCs later replaced with defendants’ own “Material Assets and Material Liabilities” documents?) Again, no harm to the REAL parties thereto, as the non-complaining banks readily feasted on the Whale Oil…
That much I can swallow, even though I believe Trump was intentionally targeted for clearly an epidemic practice.
But when the State brought in “fraud,” I got a little confused, considering the lack of harm/damage/victim/reliance, whether civil or criminal fraud.
So, if on appeal, the fraud violations are eventually thrown out, and the matter goes forward on disgorgement, I still think that asset valuation hearings/evidence need to be done before any premature and biased adjudication can be finalized, warranting “disgorgement.”
And here’s a question for you, counsel. Not a trick question, I really don’t know:
If the State proves, prevails and collects disgorgement award(s), does the $$$$ go to the state, or to the NON-victim banks who are non-parties as well, but would have been entitled to the difference, something akin to third-party beneficiaries to the state action? I suspect, to the state, -another reason to go after “deep pockets” only, but I dunno.
lin– I have not researched it but I suspect any award would escheat to the state. I suspect the Court could hold an evidentiary hearing to determine the actual losses sustained by the banks. The proof required to show those “actual” losses would make my head swim because so many factors would have to be considered, many of which are subjective. In large transactions (and even when buying a car) interest rates and other terms frequently are subject to negotiation and can vary considerably from transaction to transaction and borrower to borrower.
honestlawer: I just now am reviewing some of the statutes/laws. I correct myself that P.L.175.45 does not require intent. it does. Now I don’t remember which one I perused this a.m. when I found one that did no so require. And I’m too disinterested to care at this point. But I offer my apology to you and others.
(Just now reviewing some laws/statutes. I correct myself in stating that P.L. 175-45 does not require fraudulent intent. It does. Sorry.)
The Law is a joke. This proves it once more. No longer deserves obedience or respect. It’s a weapon being wielded against American Justice. As a people we reserve the right of self defense against that weapon. Let’s start now.
One thing’s for sure if your seeking a building loan in NY, you and the bank had better submit you paperwork through Judge Engoron’s court for acceptance.
Any adult knows this has nothing to do with justice.
I think i would be more worried about a lot of truckers not delivering to New York. They might not be bought off so easily.
There’s nothing suggesting that a lot of truckers intend to do that.
As applied to Trump, this New York statute raises three concerns: bill of attainder, 8th amendment excessive fines, and legislative direction to the judiciary as to what the decision must be- a violation of separation of powers. The Governor is to be thanked for admitting it only applies to Trump. The legislature is to be thanked for a standardless cause of action that does not require a damaged victim or trial by a jury of peers. Now let’s see if the New York or Federal judiciary can sort out this pile of caca.
“The judgment against Trump (and his family and associates) was met with a level of unrestrained celebration by many in New York that bordered on the indecent.” The response to this judgement reminds me of the Palestinians celebrating in the streets and on roofs tops when the Twin World Trade Towers collapsed. This judgement is obscene on so many levels that every CEO must be now looking to move their company out of New York or be subject to shareholders’ lawsuits. But do not move to California, Massachusetts, Illinois, Atlanta(Fulton County), Austin, or Tallahassee.
Reminds me more of the “protestors” jumping up and down on cop cars as they burn CVS stores in Baltimore and Kenosha.
Or Milwaukee, Detroit, DC, St. Louis, etc.
Well, it’s been coming for a while, but the idiot wokeist trolls seem to have finally taken over Turley’s comment section(s) with their idiotic banter, and their thoroughly dishonest claims. That, and also the frequent failure of my comments to post, and occasional disappearance of comments that I have confirmed did post successfully, leads me to conclude that this site is no longer worth the investment of my time. I can read his columns as reposted on several other sites I frequent. If Turley finds a way to work with WordPress to more expeditiously get rid of the obvious trolls, and repair the other commenting flaws, or moves his home site to a host that does a better job of these tasks, I might return. Maybe if a number of other reasonable posters here follow suit, he might get the message. YMMV. I’m outta here.
WordPress often eats & disappears comments. On other sites, about two-thirds of my comments are captured, sequestered, or vaporized. Without an attentive host, only the most determined of commenters get through. Trolls are so determined. There are over 1 million readers of this blog, so auto bots are tending to the comments’ standards. Of the million, some are going to be trolls, real or techno.
Other WordPress blogs do not allow for the same user name (“anonymous”) to be used for multiple accounts. If I could figure out which “anonymous” was commenting, I might be a little more interested in the comment section of this blog.
The valuation of property is inherently subjective. There are methodologies used by valuation experts to justify their opinions, but the valuations always remain opinions. For this reason, banks and insurance companies do their own valuations before making a loan or issuing a policy. So far as I am aware, the banks and insurers here did not rely on Trump’s valuations — doing so would have been reckless on their part. Without reliance there can be no fraud, as that term is commonly understood. Even if Trump were in technical violation of this statute, the penalty bears no relation to the offense. The due process rationale Turley cites seems on point here — this award is arbitrary and capricious.
The immediate question though is what kind of bond needs to be posted pending appeal. If cash is required that could be difficult to raise. The best outcome at this point would be for the judgment to be stayed pending appeal. I don’t know if there is a procedure for that.
Trump has to put the full amount on deposit with the state in order to appeal.
Here’s an example of his having to put the full amount on deposit in order to appeal the verdict in the first E. Jean Carroll suit: https://www.documentcloud.org/documents/24388512-trump-appeal-deposit-55m
And Max Kennerly:
“An additional point: all the normal means that a crooked billionaire would have for paying this (or, rather, posting bond) are foreclosed to him, because he’s precluded from getting a loan from any financial service registered in NY, and his companies have a monitor, so he can’t launder it either.”
I guess all these people saying businesses should move out of NYC and move to Florida don’t see the Governor there going after Disney because they do not heed the Governor’s political stances.
When the ‘political stance’ is ‘don’t sexualize children and/or molest and sniff them, the choice to leave NY is easier.
As with all things political, the electorate is obliged to sleep in the beds they make. We shall see what the future brings.
What we are witnessing is the Detroitization of the entire nation. You give the left something nice and productive and they turn it into a cesspool of human depravity and filth. These idiotic ‘educated people’ mainly middle class white women, are selling out the nation for the right to abort their kids and project empathy onto invaders as a kind of penance. Tragic.
The case of E Jean Carroll, is a bill of attainder. The legislature passed a specific law to accuse a specific person of an offense. The NY legislature greatly expanded the statute of limitations for civil rape/sexual assault. The legislation sunsetted after one year.
While the fraud law was not targeted for Trump. It was targeting Lenders, not borrowers. Not a single borrower has ever been investigated, let alone charged in the manner the law has been used against Tump
“The legislature passed a specific law to accuse a specific person of an offense” is BS. More than 2,500 suits were filed under the Adult Survivors Act, and as best I can tell, Trump was the defendant in only 1 of them. The Child Victims Act was passed at the same time as the Adult Survivors Act, with a similar 1 year clause, and almost 10,000 suits were filed. Moreover, the bulk of the damages due to E. Jean Carroll are because of Trump’s defamation of her, not his having raped her.
And you’ll now run away from proving that “Not a single borrower has ever been investigated, let alone charged in the manner the law has been used against Tump [sic]”
82nd abn 1968
SAYS”!
Boycott NY
BOYCOTT NY
BOYCOTT NY
(1) Does anyone know where the money will go, if Engoron’s judgment survives review? (2) Any reason why the lenders won’t sue Trump for damages arising from fraud?
I’m sure the plan is that it go to the Treasury of the State of New York, since they brought the case. I’m not sure how they justify the “damages,” which usually go to the plaintiff – but the lenders, who would ordinarily have been the plaintiffs, testified that they suffered no losses, and Trump did not inflate the values of his properties according to their independent assessments. Which is why I think this verdict will be overturned on appeal – who was harmed by what his companies did or did not do?
There are laws throughout the United States that impose “penalties” and those that allow for punitive damages. The statutes that impose penalties for engaging in certain conduct are “strictly construed” and are not allowed to impose penalties that are unreasonable in relation to the conduct charged. A $5,000 fine for a parking ticket would be an example. On the other hand, laws that allow punitive damages to be imposed typically are tied to a multiple of the actual damages of the victims. A recovery of more than two or three times the actual damages is suspect. The Alabama case cited by the Professor is an example. Judge Engoron’s decision fails miserably under either analysis. It was not an assessment of a penalty or punitive damages. It was nothing more than a silly little man and a puffed up Attorney General abusing the law to beat down a man who refuses to quit.
Honest,
Great comment!
Nice comment. Some of us could join together in an amicus brief! I think that would be fun! I am tired of Letitia James squandering taxpayer dollars and I am tired of her smirk
Bannon says we are no longer under the rule of law;
we are under the “reign of the Outlaws”
Concur. I hope Trump secures an appeal bond, sometimes called a supersedeas bond ,that suspends the judgement on appeal. I also hope that the suspension includes the 3 year banishment on the licenses meeted out to the defendants. I think 1 year for one of them.