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New York trumps Trump but his Towering ego ignores that he has already lost.

Nigel Morris-Cotterill

In the civil case of The State of New York v Trump the Attorney General as Plaintiff (US media persist in the error that she is acting qua prosecutor) has already won: last Tuesday, the judge found that there had been fraud. But the judgment is not as clear cut as some are making out - and Trump's decided that if he can find a camera to talk to, he's going to re-litigate on the steps of the court.

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The first thing to say is that the case has a very specific legal basis and that if it were not for that, it would be difficult to find locus standi for the Attorney General.

It is clear that there is a criminal case to answer but why is it a civil case?

Cynics would say that the case can be held without a jury so Trump's popularity (and New Yorkers still seem to hold him in high regard) and, perhaps more importantly, the lower burden of proof in a civil case favours the state. The Attorney General alleges that Trump et al, (there is a long list of defendants) overstated the value of properties in documents submitted to lenders and insurers.

The example is given of Trump's own apartment at Trump Tower which he claimed was three times its actual size and, therefore, the value was overstated by a similar ratio.

So, I can see how there was a fraud on the lenders and insurers. But how is the State involved? It is still not clear how the State of New York gets locus standi.

This is how and it's really quite bizarre, on the face of it. Yet, somehow it makes some kind of sense. Put simply, it's the state enforcing private rights, even when the victim does not make a criminal complaint to support a prosecution. In fact, there is no reason for the police to be involved at all.

The A-G "alleges that the individual and entity defendants committed repeated and persistent fraud by preparing , certifying, and submitting to lenders and insurers false and misleading financial statements , thus violating New York Executive Law s63 ( 12)"

12. Whenever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business, the attorney general may apply, in the name of the people of the state of New York, to the supreme court of the state of New York, on notice of five days, for an order enjoining the continuance of such business activity or of any fraudulent or illegal acts, directing restitution and damages and, in an appropriate case, cancelling any certificate filed under and by virtue of the provisions of section four hundred forty of the former penal law   3 or section one hundred thirty of the general business law, and the court may award the relief applied for or so much thereof as it may deem proper.  The word “fraud” or “fraudulent” as used herein shall include any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretence, false promise or unconscionable contractual provisions.  The term “persistent fraud” or “illegality” as used herein shall include continuance or carrying on of any fraudulent or illegal act or conduct.  The term “repeated” as used herein shall include repetition of any separate and distinct fraudulent or illegal act, or conduct which affects more than one person.  

Notwithstanding any law to the contrary, all moneys recovered or obtained under this subdivision by a state agency or state official or employee acting in their official capacity shall be subject to subdivision eleven of section four of the state finance law. In connection with any such application, the attorney general is authorised to take proof and make a determination of the relevant facts and to issue subpoenas in accordance with the civil practice law and rules.  Such authorisation shall not abate or terminate by reason of any action or proceeding brought by the attorney general under this section.


So, the Attorney-General - who for clarity is not a District Attorney, etc. - has authority to bring civil proceedings as a result of persistent malfeasance within the jurisdiction.

The case has been under investigation for years - so long in fact that the court had to find that there was a refreshing of the limitation period.

According to the judgment last week, "On 3 November, 2022, this Court [made a preliminary finding] that [the] defendants had a propensity to engage in persistent fraud by submitting false and misleading Statements of Financial Condition on behalf of defendant Donald J. Trump ( Donald Trump ) ."

Then it got worse "Accordingly , the Court granted a preliminary injunction against any further fraud and appointed the Hon. Barbara S. Jones ( ret .) as an independent monitor to oversee defendants financial
statements and significant asset transfers ." It's not exactly a receivership but it's in that general direction.

The judgment of 26 September (link below) is a fascinating read with the judge displaying anger and contempt for the arguments of Trumps' lawyers. "Defendants glaringly misrepresent the requirements of an Executive Law 63 ( 12) cause of action . "

It's all over bar the counting

Trump is busy being Trump. Just as we saw throughout his presidency he is long on assertions but short on supporting evidence. So he claims that the case is being brought now to diminish him in the eyes of those who might choose him as the next Republican candidate for President (he conveniently forgets that the case has been in and out of court for a year or so and investigations long predate his expired term as President) and that the over-valuing of property is irrelevant for two reasons - first that he has often sold properties for more than their independent value and that - to paraphrase - the Attorney General doesn't understand how business is done in New York.

There's an interesting sidelight but it needs a backstory.

Auditors have long sought to deny their culpability by saying "we only know what we are told and do not undertake investigations or inquiries" or some such. It's there, in the preamble to auditors' reports.

While he was President, Trump sued accounting company Mazars to prevent them disclosing his tax records under a subpoena issued by the House of Representatives and various committees. He also sued Deutsche Bank for the same. Subpoenas were issued to others, too.

The case went to the Supreme Court which (some might think unfairly) allowed it to jump the many cases in the list before it. The Court said that it didn't need to consider executive privilege (i.e. the right of the President to keep his affairs secret) but was really a question of separation of powers i.e. were the various bodies trying to act as law enforcement which they are not entitled to do.

Mazars, nevertheless, continued to act for Trump and his businesses and associates until they terminated their retainer after the 2022 judgment found that fraud was proved.

Donald Bender, a former accountant at Mazars USA, gave evidence yesterday. He has left Mazars and Mazars no longer represents Trump. Bender was asked about Mazars involvement in the preparation of Trump's statements of financial condition between 2011 and 202. He described them as "balance [sheets] of Mr. Trump's assets and liabilities." In terms he said "I just entered what I was told by The Trump Organisation."

Originally expected to last several months, now that the principle matters to be decided are as to the penalty to be paid, commentators are saying it could be over in a few weeks.

Trump on the other hand has to watch how long he's in New York. He doesn't need to be at the current hearing but he's choosing to be so. It's important: as much as USD250m is being talked about. Trump is in no mood to settle: he's still determined to say there's no justification for the existing decision. There is also the risk that his licence, and that of other defendants, to conduct business in New York could be revoked.

But he has moved his residence from New York to his house in Key Largo, Florida.

New Yorkers pay a personal, state, income tax in addition to federal income tax. The New York rate is on a scale between 4 and 10.9%. There is no personal income tax in Florida. If he maintains a permanent residence in the state of New York or spends more than 184 days a year in the state, he becomes liable for New York taxes. A "holiday home" or crash pad doesn't count as a permanent residence.

Further Reading:

New York law at Findlaw:

Full judgment 26 September 2023 https://int.nyt.com/data/documenttools/trump-judges-ruling/ce6de7d63622…