• Second Verse, Same as the First: NY’s Civil Suit Against Trump

    September 27, 2022 // 1 Comment »

    New York Attorney General Letitia James filed a lawsuit against former President Donald Trump, three of his adult children, and other senior members of the Trump Organization alleging business and insurance fraud as well as conspiracy for the same, marking the end of a three-year investigation into Trump and his business. The civil suit is basically a version of the criminal indictments the Southern District of New York (SDNY) and the Manhattan and New York State Attorneys General have failed to generate at the federal and state levels. The suit claims in a nut shell what the criminal cases claimed; Trump over-valued the worth of his properties to use them as collateral for new loans, and then undervalued those same properties come tax time to pay lower taxes.

    The criminal cases have fallen flat because of the need to prove actual criminal intent, that Trump lied intending to commit a crime. This proved impossible when the Trump family would not confess (Trump took the Fifth some 440 times during recent questioning) and when no one could be found to Fredo him by turning states’ evidence in return for some lower sentence himself. What’s left in what has clearly become a prosecution driven by the political need to do something ahead of 2024 is this civil suit. Basically same accusations, same weak evidence, but lower standards of proof with lower penalties.

    Enemies of Trump hope this works out better than previous attempts in New York to prosecute him by the Southern District of New York (SDNY) and failing that, the New York State Attorney General Letitia James. The former already failed in 2012 to indict Trump’s children after they were accused of misleading investors, and faced judicial rebukes in the past for sloppy work and political motivations.

    The narrative runs like this: both offices had been compiling nasty stuff against Trump for years, held back only by custom which prevented them from indicting him as long as he was the president. As of January 20, 2021 he became open game. But since then both offices failed to indict Trump. The New York state system is no such kangaroo court, and affords defendants far more protections than federal courts. There are strict rules governing evidence that can be presented to a grand jury, and even minor procedural errors can result in indictments being thrown out. “If you’re a white-collar defendant, you’d rather be in New York State court than in federal court any day of the week,” said SDNY’s former top deputy.

    The current try is kinda of pathetic, just a lawsuit, which carries no potential criminal jeopardy, so no formal indictment, no possibility of jail time. The suit holds Trump misvalued some New York real estate from 2011-2021 to obtain loans and pay lower taxes, a civil offense at worst usually settled with new assessments or a fine.
    Yet even this case against Trump could be difficult to prove. Property valuations are subjective, and most all financial statements include a disclaimer stating that they have not been audited. Now underline this part: Deutsche Bank and Trump’s other lenders were hardly victims; all of his loans are either current or were paid off, some early. Trump does not use email, so any instructions he might have given his employees about the company’s financial statements are unlikely to be in writing. The lack of a damning email, or a witness inside his company willing to testify against him, will complicate efforts to show Trump intentionally used his financial statements to defraud lenders and insurers.
    For people not named Trump (a key giveaway that this is all political) the city of New York assesses a value to each property for tax purposes. Nearly every property owner in NYC believes his or her assessed value is too high and pushes back, to the point where these disputes are not even handled by a court, instead through a tax commission grievance process. Owners want a lower value to pay less tax, except when they approach a bank for the equivalent of a refi loan, when they want their property to seem more expensive to secure a bigger loan at a better rate. It is the bank who then decides what a property is worth to them as collateral, via their own due diligence.
    It is always complicated, as much art as science; beyond the usual valuation factors of location, location, location, some buildings in New York are iconic, or famous for their brand name (cough, cough, “Trump”), what history they represent, etc. Some just have nice views. Sometimes the bank is generous because in return for the loan they’ll secure some other business of value to them. Over-valuing/under-valuing real estate in New York City is sport, but as a crime is so much not ado about nothing it is not going to send anyone to jail. Imagine the yawns as a jury listens to forensic accountants explain Trump’s tiered exemptions, and how their value is subtracted from the DOF assessed value to calculate a taxable value which is then multiplied by the current tax rate for the specific assigned property class. Next session we’ll talk about somewhat sketchy easements Trump obtained going back to when Mayor Koch was in charge.
    The jury will quickly discover the regulations governing how one values a NY property are dense. Built into the law is an automatic fudge allowing the same property to have both a high market value and a lower asset value. Problems are sorted out as civil matters and usually settled with the city sending out a bill, especially if the bank is not claiming fraud, only the DA, as in Trump’s case.
    And in the end, what? The lawsuit seeks to permanently bar the Trump family members named from serving in officer or director positions in any corporation or business licensed in New York State. The attorney general also seeks to bar the former president and the Trump Organization from entering into any New York real estate acquisitions for five years, and to take back all financial benefits obtained through the allegedly fraudulent practices, estimated to total $250 million. None of those things, even if the suit if fully successful, is likely to have an effect on Candidate Trump and none would prevent him from running for president. Business-wise, Trump merely needs to re-incorporate in another state, maybe business-friendly Florida, to re-start operations.
    The Democrats’ plan to find Trump guilty of something, anything, seems to be coming to its own sad ending, the lawsuit beyond a whimper, not a bang. They have tried to turn belief Trump is evil into crime over the last five years — Emoluments Clause, Russiagate, impeachments I and II, Stormy Daniels, obstruction of justice, and incitement. On the sidelines were extra-judicial attempts connected with the 25th Amendment, having doctors who never examined the man declaring Trump mentally ill, and even accusations of incest. The Southern District of New York previously failed to indict Trump’s children and failed to prosecute Paul Manafort. E. Jean Carroll’s rape-cum-defamation case was so egregiously lousy even the Biden DOJ took Trump’s side. The convictions of Trump associates lawyer Michael Cohen and accountant Allen Weisselberg did not touch the principal himself.
    The SDNY brought no charges. Early this year, the Manhattan district attorney, Alvin Bragg, instructed prosecutors to halt their effort to seek an indictment of Trump. It looks like Letitia James is all who is left to  make the last flaccid move and then turn off the lights on her way out.

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    Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.

    Posted in Democracy, Other Ideas

    Trump is Just Not Going to Jail

    May 9, 2022 // 7 Comments »

    If you had “Trump goes to jail” in the office pool, better double-down on “Trump Gets a Minor Civil Fine.”

    The end of any possible criminal prosecution out of New York over Trump’s finances has come as the grand jury seated to find them has sunseted. The possibility of a civil penalty, likely a fine, looks poor but anything is possible. This is all a long way from predictions when these cases were initiated through the Southern District of New York (SDNY) that the walls were supposedly closing in. Dems, dragging all their Biden baggage along, are going to have to beat Trump at the ballot box, assuming anyone can afford the gas to drive out to vote.

    We need not spend too much time on all the failures preceding those of the SDNY, though a list is educational: DNC server, Putin’s agent, all of Russiagate, Mueller Report, Impeachment I, Impeachment II, and Stormy Daniels. The January 6 campaign is floundering. The IRS has had Trump’s taxes in hands for decades without any criminal prosecutions, and the New Jersey Gaming Commission held Trump’s casino financials without incident. It is possible to conclude however much one might hate Trump, he just is not guilty of any crimes.

    Each prosecutorial dream began with the certainty Trump did something wrong, that the evidence was growing, that some stooge would flip (and the mindless Godfather references), followed by… nothing much. The true believers will always believe, but for most Americans the over-stimulus followed by the let down followed by mumblings it all wasn’t fair again have grown tiresome. Yet there are always teachable moments, even in such farce, and the most recent failure in Manhattan to bring down Trump is one of those.

    Like all of the capers, it begins with the premise Trump is sleazy and any success he enjoyed must be due to cheating. In the instant case, the DA claimed The Trump Organization had over-valued some properties to obtain loans from Deutsche Bank, and then under-valued those same properties to pay lower taxes to the city of New York. This is all that’s left in the civil action in New York against Trump. The investigation along these lines has been running since 2019, so far with no actionable results. The most recent legal move was a contempt citation against Trump over not turning over a couple of cell phones, that after Trump already complied with millions of pages of documents and 13 employees of the Trump Organization sent up for interview. The belief seems to be there must be something in there somewhere.

    For anyone who has owned property in New York, either directly like Trump or via the co-op system like millions of middle class New Yorkers, none of this is a headline. It literally happens all the time. For example, Building A sits on land the City has taxed for hundreds of years. The value of that land in that context is hardly in contention. But if someone wanted to use that land as collateral for a loan, they might instead explain how the ground floor of the building is now ready for flush post-Covid clients to return. They might cite a new luxury building across the street, which will raise local real estate prices. They might show how the average tenant stays longer in their building then elsewhere, assuring stability. What something is worth — a building, a Pokeman card, a drink of water in the desert — is very much a negotiation between two sides. This is known as valuation.” There are numerous methods of assessing the value of a property. In New York you have your assessed value, your transitional value (Tax Class 2, 3, and 4 only) and other variables such that there are lawyers who specialize in nothing else.

    Banks, which look to the future to make sure their loan will be profitable, understand well what the DA is trying to avoid, that property valuation is inherently subjective. It is important to note Trump loan seller Deutsche Bank has raised no objections, made no claims of fraud, and has not asked the DA to look into all this. Nope, the Manhattan DA’s office itself scanned the skies over Gotham and decided they saw a crime. Some say it was a political action, because in almost every other value dispute case in New York history the issue was sorted out by negotiation, and at last resort, by a special civil court that does nothing else. No one can say Trump is the only instance where the City has jumped from valuation to a criminal case with a grand jury, but it is damn hard to find another modern example.

    For the New York DA to “win” a political case like this, some written decision by a no-name magistrate judge’s tax court saying Trump should pay some more property tax is far from enough. So, they had to imagine the case as a criminal one, and that’s where everything falls apart (as with obstruction, as with incitement.) Though the law differs with obstruction and incitement to some extent, basically to win these as a criminal cases the DA has to prove criminal intent. So prosecutors would have had to prove not just that Trump inflated the value of his assets, but that he intended to break the law doing so. Even harder is to show the valuation was Trump’s personal decision, near impossible to do with massive, complex corporations where the actual decision maker is traditionally obscured exactly to avoid such liability.

    Prosecutors fell victim to their own prejudices. They had hoped to “flip” Allen Weisselberg, the Trump Organization’s longtime finance chief by drumming up equally weak criminal tax charges against him. Those charges have to do with Weisselberg accepting car service and apartment payments from Trump and allegedly not declaring them properly as income on his taxes. These cases are again typically settled with a fine (though Weisselberg maintains innocence) not jail. The infamous Al Capone tax case is infamous because it was so unique. Weisselberg, with his years of financial experience, has a pretty good idea he is not going to jail and thus has little incentive to rat out Trump if indeed he had anything to rat about.

    That pretty much left prosecutors with Michael Cohen, the guy who pleaded guilty to nine criminal offenses, including lying to Congress, tax fraud, and campaign finance violations. Cohen would have faced questions of personal bias, given his own multiple lawsuits against Trump. He would have faced questions about whether he received a benefit from prosecutors, early release from prison, for cooperating. If a liar like Cohen is your only witness on Trump’s intent, you really have no witnesses.

    There are still 19 cases pending against Trump, including a number of civil suits. Maybe one of them will land a blow. But none have the potential to be the knock-out punch Dems thought was an easy route to winning 2024.

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    Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.

    Posted in Democracy, Other Ideas