What is common practice in such cases? Of course the amount of this judgement is much higher than typical.
Are the NY appellate courts hard nosed, cut and dried about these sorts of bonds? Or do they tend to be flexible?
abilities.
I've read that Trump's numbers are half of what Biden is raising. Small donors are abandoning Trump. They know the money they donate is going to be used to pay his legal bills. Large donors know the same thing.
It will be interesting to see the spill-over effect of Trump's takeover of the RNC and their ability to raise funds for House and Senate candidates. It very well could mean that Democrats will have a huge warchest advantage over their Republican counterparts come November.
“Is it just a coincidence that Donald Trump took over the RNC, fired most of its Republican staff, and installed his daughter-law as co-chair at the same time he’s become desperate for money and can’t post bond? Donors better beware.”
He hasn't found a Gulf country to buy one of his properties for above market value. Maybe Elon could buy out Truth Social and merge it with Twitter.
You'd think there would be enough people who'd benefit from him being back in office to throw a few hundred million his way.
Especially if Trump loses, now you have a the whole apparatus looking at you?
Besides, these people probably understand he has no loyalty to anyone but himself and they might be just as at-risk as before from his randomness.
After favors. A few hundred million doesn't seem like much money to a middle eastern petro state, but that's just me
And then they're going to have to try to get that money back having received nothing.
"lawfare" to delgitimize the criminal prosecutions and to normalize the criminal conduct - but more cynically, to throw red meat to their changed readership. It used to be the intellectual right. Now it is a bunch of populist morons.
Everything McCarthy and McLaughlin write about Trump legal issues is wrong. They don't really write so much as live blog what tey think they need to express to increase eyeballs and traffic.
It is just such a pathetic shell of what it used to be. Sort of like the GOP.
I am not a Trump defender and think he is a terrible businessman and person in general, buuuut ...
The claim against him was for fraudulent business records, leading him to get better loans and insurance rates. But neither the lenders nor the insurers were suing him (and I think one big lender said they were doing the deal with or without his claims). Doesn't someone need to be defrauded in order for some to commit fraud? It does seem like the weird NY law they found really makes no sense.
Does NY prosecute every SEC registrant that has a restatement due to fraud?
It seems to me a case of once again hurting the overall narrative (things like the Georgia manipulation) by just throwing up marginal issues to take him to court.
... keeping fraud out of the marketplace.
It seemed very clear that he broke the law.
What struck me as a bit shocking was the size of the penalty at $355 million. But I have no idea what would be considered normal.
One cannot make material representations to obtain more favorable interest rates and terms and cure the fraud by paying the favorable terms. It is a moronic position to take.
The right thing to do would be to settle, say, for $250 million. Cash.
As I posted, it seems there was no fraud to cure. You know that and I know you just like to egg people on, but come on. The terms were set by the banks own evaluation, per their testimony I believe. A counterparty hasn’t brought a fraud tort against him claiming he got favorable terms at their detriment. Honestly the record seems to indicate that his representations had no impact.
It’s like a trader talking his book. Everyone knows to do their own evaluation. A house seller listing their house at a high price isn’t defrauding the seller, the seller makes their own determination of value and the parties meet or they don’t.
Call people out if you want, but do it for things they actually post.
He violated New York law. It wasn't a close call.
..."No harm, no foul" doesn't seem like a very robust concept when it comes to financial fraud. Spitting on the sidewalk, maybe.
As a real estate appraiser, I find the Trump Organization's repeated fraudulent citation of a certain appraiser as the source of cap rates and values that the same appraiser said he had never provided to anyone to be appalling, and an action that deserved punishment.
As far as the myriad other fraudulent activities, the state of New York has apparently been passing legislation for over 60 years that put the state in the position of a party that is harmed by financial fraud.
Here is J. Engoron's decision in the case: Trump fraud decision.
Here is s snippet about the appraiser:
________________________________________
Doug Larson
Doug Larson is a valuation advisor and certified New York real estate appraiser who currently works at Newmark. Prior to working at Newmark, he worked at Cushman & Wakefield for almost 25 years. TT 1558-1559.
In 2015, while at Cushman & Wakefield, Larson appraised 40 Wall Street for Ladder Capital as part of its due diligence. TT 1560-1570; PX 118.
Larson testified clearly and credibly that although his name is cited as the source to justify a 2.940 capitalization (or “cap”) rate8 on Niketown, a property in which Donald Trump owned two long-term leases on 57th Street, Larson never had a specific conversation with Jeffrey McConney in which he advised him that such a cap rate would be appropriate; nor was he aware that he was listed as a source for such a cap rate. TT 1572-1575; See, e.g., PX 758. Larson further said that he would not have advised McConney to select that cap rate, as “it’s not how we would value [it] in our practice.” TT 1583. Larson stated that McConney was incorrect in stating that he consulted with Larson when valuing Trump Tower. TT 1581.
Upon learning that his name had been repeatedly used to justify cap rates that he had not recommended, Larson said it was “inappropriate and inaccurate … I should have been told and, you know, an appraisal should have been ordered.” TT 1587.
Larson further took issue with his name being used to justify a cap rate on the property controlled by a Vornado partnership interest. In 2012, Larson appraised the property at 1290 Avenue of the Americas at $2 billion with a cap rate of 4.5 percent. PX 1824; TT 1588-1589. Notwithstanding, in the following SFC’s supporting data, McConney cites Larson as the source for using a 3.12 percent cap rate, even though he never worked with McConney to pick a cap rate to value that property, and that he would not have, as valuing minority interests is a specialized area beyond his expertise. TT 1589-1595.
In a 2015 appraisal of 40 Wall Street, Larson included the value of a Dean & Deluca lease that yielded annual rent of $1.4 million, and he applied a 4.25 percent cap rate, for a total valuation of $540 million. Notwithstanding, the 2015 SFC backup data double-counted the Dean & Deluca lease. McConney also chose a much lower cap rate than that on the appraisal and listed the total value of 40 Wall Street at over $735 million, citing Larson as the source. Larson repeatedly confirmed that he was not a source for that number, that the number was nearly $200 million more than his own appraisal, and that he did not work with McConney or anyone else at the Trump Organization to determine the cap rate used to generate the $735 million value.9 PX 118,729; TT 1601-1606.
8A capitalization rate is calculated by dividing a property’s net operating income by the current market value. This ratio, expressed as a percentage, is an estimation of an investor’s return on real estate. The higher the cap rate, the lower the value. Cap rates have an extraordinarily large effect on the value of a property.
9In a theatrical attempt to halt the testimony of Doug Larson, defendants tried to impeach him with a 2014 email showing that McConney had asked for his advice on whether the fact that a ground lease had a far-off expiration would affect the cap rate in any way. Defendants then suggested that Larson had committed perjury and should be removed from the stand to consult with counsel. As an initial matter, the Court does not find Larson’s testimony to be contradictory. The fact that McConney sent one email in 2014 that generically discussed the effect of lease expirations on cap rates does not in any way give defendants cart blanche to cite Larson as an omnibus form of counsel that immunizes all the future manufactured valuations that comprised the SFCs. Further, defendants do not cite to this email in the supporting data for the SFCs, they cite to a series of telephone calls that, by Doug Larson’s account, never even took place. Moreover, the assertions of defendants’ counsel, Christopher Kise, that Larson’s testimony amounted to such blatant perjury he should be immediately removed from the stand to consult with counsel about his Fifth Amendment rights is belied by the record and seemed like nothing more than a performance for a non-existent jury. PX 109; TT 1696-1712; 1754-1767.
Where trump used a sq ft footprint that was 3-4x larger than actual. He tried to argue that because his penthouse was three stories tall (hey look at my really tall ceilings!) that he should be valued at least 3x the footprint because conceivably those stories could be developed into built space at the same multiple.
I don’t have time to look up the facts but these numbers are directionally right and just go to show how trumps dumb ego got him in trouble.
I will say that now whenever we prepare a balance sheet or PFS I am paranoid about being as conservative as possible. I’m sure I’m not alone in fearing the wrath of an angry state. I don’t disagree that trump is a lying and exaggerating ass hole but I do not like the precedent here.
...State legislative history, I'm not sure this is precedential. I haven't scrutinized it super intensively, but NYS has prosecuted financial fraud on behalf of the "people of New York" before. Of course, prosecutorial discretion always enters into any decision to charge.
Here's a snippet from Engoron's most recent decision. quoting his earlier decision on motions to dismiss:
“In varying contexts, courts have held that a state has a quasi sovereign interest in protecting the integrity of the marketplace.” People v Grasso, 11 NY3d 64, 69 at n 4 (2008); People v Coventry First LLC, 52 AD3d 345, 346 (1st Dept 2008) (“the claim pursuant to Executive Law § 63(12) constituted proper exercises of the State’s regulation of businesses within its borders in the interest of securing an honest marketplace”); People v Amazon.com, Inc., 550 F Supp 3d 122, 130-131 (SDNY 2021) (“[T]he State’s statutory interest under § 63(12) encompasses the prevention of either ‘fraudulent or illegal’ business activities. Misconduct that is illegal for reasons other than fraud still implicates the government’s interests in guaranteeing a marketplace that adheres to standards of fairness …”).
__________________
As for appraised values, I have told clients that the market value definition says that it is "the most probable" price that would have been paid as of a given value date. So if we think of the normal distribution curve, my point-value estimate is at the very top. Could it be 5% more, or 5% less? Yes. Could it be 36% more (e.g., $735 million versus $540 million)? Uh...nope.
everyone knew they made numbers up. But also everyone knew they made numbers up and didn't care about the Trump numbers.
...This is from Engoron's decision on preliminary motions:
"Executive Law § 63(12) provides, as here pertinent, as follows:
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 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 pretense, 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.
"As this Court and others have made abundantly clear, “[i]t is not disputed that the Attorney General is empowered to sue for violations of [Executive Law § 63(12)].” People v Greenberg, 21 NY3d 439, 446 (2013) (finding Executive Law § 63(12) to be broadly worded anti-fraud device); People v Ford Motor Co., 74 NY2d 495, 502 (1989) (“Executive Law § 63(12) is the procedural route by which the Attorney-General may apply to Supreme Court for an order enjoining repeated illegal or fraudulent acts”)."
... negotiations, so the lender accepting the incorrect values cannot be imputed to the State which is the injured party per the statute.
the fraudulent documents ground for the AG's actions. Whether the lender suffered a loss is not required. Given the fact NYC is the financial capital of the US / World I can certainly understand the legislature taking a hard line view and passing a bill like this.
Of course there is the secondary harm to competitors. If Trump Org is bidding on a project based upon their inflated financials that gives them a competitive advantage with the lower interest rate allowing Trump to bid higher and still get a return on his money.
but I agree that these NY cases are bizarre and out of touch. There is a reason that we require standing in the courts. I don't even know how the court proved that Trump received a lower rate than he would have but for the alleged fraud.
Banks always take the most conservative view of assets when lending or at least conduct their own diligence and valuations. This whole case has seemed insane to me.
But Andy is going to call me a Trumper when I voted for Biden and probably will again despite my distaste for Afghanistan, his aloof foreign policy, etc.
in question is used frequently.
I don’t find the law objectionable. The state has a right and obligation to try and ensure a fair level playing field for businesses. It is not just the lenders who were defrauded by Trump obtaining financing at an improved rate by submitting fraudulent financial statements. It is also all the businesses who follow the law and accounting rules. Especially his direct competitors.
It would be very difficult, if not impossible, for all those entities to recognize their harm or quantify it. That is one reason why the state needs to step in on their behalf. A trustworthy open marketplace is essential for the operation of our economy.
The bottom line is that Trump and the Trump Organization blatantly cheated. They broke the law. They tried and succeeded in obtaining an unfair advantage by doing so. The calculated monetary advantage they obtained is $463,000,000.
I have no problem with Trump and his business being harshly punished. Those who play by the rules are owed this at a minimum.
Falsification of business records be intended to conceal evidence of another crime. The indictment didn’t specify the crime, but the DA has suggested that the payment was an unreported campaign expenditure. The feds looked at and passed on prosecuting that, likely because they felt they couldnt prove that the cover up of the affair was for campaign purposes as opposed to, for example, marital purposes.
Without the felony charge it sounds like the misdemeanor case is pretty tight, but not the type of thing that gets prosecuted.
She took his money (apparently) to provide the service of keeping her damn mouth shut.
Then, she did interviews. Which is pretty much the exact opposite of keeping her damn mouth shut.
Just can't get good service anymore.
Look in the mirror, Donald, and if you’re in the passenger seat of your soon to-be-seized limo, cant it down from your eyes to your “boca,” your big fat mouth.
I want you out of Malibu, Trump. I don’t like your jerk face. And I don’t like you!
Go find a cabbie that agrees with you and who doesn’t like the Eagles!
Or post a bond to stay enforcement, then the only real option to stay collection is to file a bankruptcy.
The inability to secure a bond does not necessarily equate to there being a bankruptcy option. Bonding companies want security for 120% of the judgment. Bonding companies look to available collateral for security, here, the real estate, and conclude they don't want illiquid collateral, especially real estate that's already liened up. Stated differently, there may not be enough real estate equity to secure 120%. Trump may have sufficient assets to pay off the secured and unsecured creditors, plus the plaintiff. I'd wager he does which moots out bankruptcy. It's just that no bonding company will take the risk on security. Stay tuned....
And may not be able to do so. And my understanding is that his truth social shares may be worth billions (which makes it odd that he cant pledge them as collateral unless there is still too muvh uncertainty on the merger) I just meant that would be the only other potential route to stopping collection.
Of course, in principle the idea that a party could satisfy debts from non-liquid assets might be a pretty good reason for a stay—coupled with an injunction against transferring the assets—to the extent that a forced liquidation during appeal would result in a loss of value that would be unlikely to be recovered if the appeal is successful (i.e. irreparable harm).
Plaintiff in the event the appeal is unsuccessful? Why should plaintiff have to take the risk of values dropping? I have no idea how many monetary judgments are stayed without a bond but my impression is this would be the exception not the rule.
I dont think the concern is loss in market value. The concern is a forced sale generating less than market value—essentially penalizing the appellant beyond the judgment value for pursuing an appeal.
My assumption (and he’d have to submit evidence for it) is that an injunction would adequately guard recovery — i.e. that he has assets multiple times the judgment such that there is not a real chance of failure to pay should it be affirmed, and that an injunction preventing the transfer of assets, recovery would be ensured.
If that’s true, and a court finds it could fashion a remedy that both ensures recovery and makes a potentially wasteful fire sale unnecessary, that seems like the best way to avoid irreparable harm and balance the interests of justice (2/3 of the factors). But its an equitable question and courts have wide discretion to fashion remedy here (perhaps combining an injunction on real estate assets with say a 200 million dollar bond)
Of course the other factor is likelihood of success on the appeal, and so it also depends in large part on the facial reaction to the merits of the appeal. If they think there’s a good chance they reverse or modify, that would weigh in favor of not forcing the fire sale (and vice versa).
lifted as to the NY judgment because the judgment is grounded in fraud and is non-dischargeable? Or am I misunderstanding how this works?
Caveated with the disclaimer that Ive only appeared in a bankruptcy court once, and usually rely entirely on our bankruptcy lawyers when issues arise in my matters, so this is all speculation:
1) Im not sure — based only on the statute — that the exception applies here. The debt itself was a penalty for fraud but the debt procured through fraud would have been the underlying loans.
2) I think there is a difference between dischargeability and the stay. And the stay (and the Code) really protects the other creditors as much as a debtor. If he did file (and met other requirements) I imagine all other creditors would object to a lifting of the stay as it would essentially turn an unsecured (and nonfinal) claim into a highest priority claim over secured creditors. Again this is speculation, but it would surprise me if that were how it worked.. Rather I think non-dischargability (if it applies) means that once he emerges from bankruptcy, hed still be liable (assuming its not overturned). But that doesnt mean the claim would jump the creditor line in collecting from the estate during the pendency of proceedings.
This analysis is along the lines of what I was guessing. Note that even the exceptions in Chapter 7 (as opposed to Chapter 13) cases that this decision notes only applied to post-petition earnings that under Chapter 7 are not assets of the estate. But non-dischargeability does not mean relief from the stay and ability to attach assets of the estate.
That if the defendant is found guilty of fraud that their debt cannot be discharged in bankruptcy?
Actually that case was about a debtor’s debt for money that was procured by fraud not of the debtor but of a non-debtor third party, but for which the third larty was liable. There seems at least an analytical difference between a debt procured by fraud and a debt for a penalty owed to the government for having committed the fraud. But in any event — that does not tackle the automatic stay issue at all, and whether there could be a collection despite a pending bankruptcy
That decision discussed when the issue first came up of how Trump would cover the required bond to appeal. The opinion I read felt that the Supreme Court ruling would prevent Trump from avoiding posting bond by declaring bankruptcy. I’m legitimately asking the question.
I don’t know the answer
...for an entity that has real estate that's been foreclosed upon--whether for mortgage default or to enforce some other type of lien--to file bankruptcy, which adds more time and complexity to the resolution of the foreclosing entity's matter. Hmmm...we seem to see a theme here.
- sale, seizure or whatever - would be Trump Tower in Chicago, so that we could get his name off the building and stop spoiling a beautiful river view.
