Explaining the Trump Fraud Ruling

Yesterday, Judge Arthur Engoron ruled that Donald Trump, Don Jr., Eric Trump, Allen Weisselberg, and Jeffrey McConney all committed fraud in New York State. The ruling was made on motions for summary judgment. The case is complicated, and I read several articles about it before finally turning to the text of the judge’s ruling itself. Before going further, I should note that this is a civil case, not a criminal case. That means civil penalties can be imposed, but there is no possibility of jail time. 

A motion for summary judgment is based on evidence already submitted to the court before trial. Based on that evidence, the Trumps’ attorneys moved for summary judgment in their favor—that is, for a judgment dismissing the case because the evidence and arguments did not support the charges. The New York Attorney General moved for partial summary judgment against the Trumps—that is, for a judgment that the evidence and arguments submitted before the trial already proved one part of the seven-part case against the Trumps. 

Summary judgment is granted when the evidence already submitted means there are no material issues of fact left to decide. 

Judge Engoron described the case and why summary judgment was particularly reasonable:

“The instant action is essentially a ‘documents case.’ As detailed infra, the documents here clearly contain fraudulent valuations that defendants used in business, satisfying OAG’s burden to establish liability as a matter of law against defendants. Defendants’ respond that: the documents do not say what they say; that there is no such thing as ‘objective’ value; and that, essentially, the Court should not believe its own eyes.

“The defenses Donald Trump attempts to articulate in his sworn deposition are wholly without basis in law or fact.” 

The Fraud

The lawsuit has seven different causes of action. The first cause of action requires only that the defendants knowingly made false statements or concealed information on insurance applications. It does not require showing that the Trumps intentionally defrauded anyone–only that they knowingly lied about the value of their properties. The second through seventh causes of action are based on violation of New York Penal law prohibiting falsification of business records, issuance of false financial statements, and insurance fraud. These six causes of action require a showing of intent. 

Judge Engoron ruled against the Trumps on the first cause of action, and set the others for trial. They clearly lied about the value of their properties, overvaluing them by somewhere between $812 million and $2.2 billion. 

One example: the Trump Tower apartment that Donald Sr. lived in for decades is 10,996 square feet. He submitted false documents claiming that it was 30,000 square feet, and continued to lie about the square footage even after getting written notification that it was false. The judge wrote, “A discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud.”

Of course, that was just one of the instances of fraud shown in the extensive evidence, and not even the most egregious. In page after page, the judge’s order details eye-popping over-valuations submitted to insurers or lenders, in flat contradiction professional appraisals furnished to the Trumps’ and also of the Trumps’ own records. 

The judge denied the Trumps’ motion and granted the Attorney General’s motion. The judge also ordered penalties against the Trumps’ lawyers for their repeated disregard of facts and law. 

The trial will determine whether they told the lies with the intent to defraud, and whether the lies were material to the fraud.

Because of the determination of massive fraud, the judge revoked all licenses to do business in the State of New York held by any of the individual defendants or any businesses they control. He ordered that the businesses be dissolved.  

The Lawyers

The Attorney General also requested sanctions against the Trumps’ attorneys. After discussing the specious arguments raised and repeated by these lawyers, Judge Engoron writes: 

“Defendants’ conduct in reiterating these frivolous arguments is egregious. We are way beyond the point of ‘sophisticated counsel should have known better’’; we are at the point of intentional and blatant disregard of controlling authority and law of the case.” 

And

“Exacerbating defendants’ obstreperous conduct is their continued reliance on bogus arguments in papers and oral argument. In defendants’ world: rent regulated apartments are worth the same as unregulated apartments; restricted land is worth the same as unrestricted land; restrictions can evaporate into thin air; a disclaimer by one party casting responsibility on another party exonerates the other party’s lies; the Attorney General of the State of New York does not have capacity to sue or standing to sue (never mind all those cases where the Attorney General has sued successfully) under a statute expressly designed to provide that right; all illegal acts are untimely if they stem from one untimely act; and square footage subjective.

“That is a fantasy world, not the real world.”

Judge Engoron ordered each of the attorneys to pay a penalty of $7,500. 

The trial is scheduled to begin on Monday, October 2.