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The Trump Judgement

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New York’s Trump Fraud Findings Refute Judge’s Conclusions

By Jay Tucker

 

Last week, a New York court issued judgments against Donald J. Trump and his sons, asserting violation of state anti-fraud law in connection with several real estate mortgage loans.  The judgments, which aggregate $355 million and may escalate to $454 million or more, shocked Republicans and Democrats alike and stunned the national real estate community.  It was immediately apparent that something was wildly wrong, since the Trump transactions were nothing unusual or remarkable for the real estate industry.

Essential Requirements for Claims of Fraud

The case primarily involves applications for mortgage loans submitted by Trump entities to major federal banks.  The state of New York claims that Trump, in connection with such loans, committed repeated fraudulent and illegal acts.  The judge acknowledges that common law fraud (also known as “misrepresentation”) requires a finding of five elements: (1) A material statement of fact (not opinion), (2) falsity, (3) knowledge of the falsity, (4) justifiable reliance by the alleged victim, and (5) damages.  Although the judge apparently concludes that all of the elements have been proven, it is quite obvious that none, let alone all, of the required elements of fraud and misrepresentation were proven.

  1. Material Statement of Fact: Most of the 92-page document relates to alleged false statements in so-called Statements of Financial Condition (SFCs), which were schedules of values allocated to various Trump properties.  Values, by their nature, are opinions (not facts) and therefore cannot serve as a basis for a claim of fraud.
  2. Falsity: The Statements of Financial Condition were merely statements of opinion submitted by the proposed borrowers and guarantor(s) and, thus, were neither true nor false.
  3. Knowledge of the Falsity: The proposed borrowers knew that the SFCs were schedules of opinions as to values, were subject to debate, and were neither true nor false.
  4. Justifiable Reliance by the Alleged Victim: The word justifiable appears only twice, only on page 2 of the document, and only with respect to a listing of the required elements of fraud and misrepresentation.  The judge reports that some of the bankers indicated that they had relied on statements in the SFCs (i.e., as to valuations) in connection with making a loan, but the judge’s findings do not provide any grounds for determining whether or not any such reliance was justified.  Valid justifiable reliance does not even appear to be possible:
  1. The Office of the Controller of the Currency (OCC) has promulgated laws and regulations prohibiting federally chartered banks from making large commercial mortgage loans without first securing an appraisal by an independent and state-licensed and/or state-certified appraiser, which appraisal must comply with additional applicable requirements. Reliance upon other valuations that deviate from the required appraisals is clearly not justified.
  2. Valuations by the borrower or appraisers engaged by the borrower are subject to bias and conflicts of interest.  Reliance on such tainted valuations is unwarranted and unwise and unjustified.
  3. The judge’s findings contain evidence that valuations contained in the SFCs submitted by Trump entities were summarily reduced 50% by one of the lenders, which lender also reduced valuations submitted by similar borrowers in similar situations in similar amounts.  Such policies evidence that bankers recognize and acknowledge that they are not justified in relying on borrower valuations and, in fact, do not and will not so rely.
  1. Damages: The findings confirm that all of the lenders suffered no loss or damage and apparently were paid in full and in a timely manner.  Thus, yet another essential element for recovery for common law fraud and misrepresentation did not exist.  As the Wall Street Journal concluded (2/17-18/2024), “there was no real financial victim.”

Notwithstanding that New York, for the above reasons, has no valid claim on behalf of itself or any of the lenders for common law fraud and misrepresentation, New York is claiming under a state statute that some immaterial mistakes or misrepresentations justify recovery, not for the banks, but for the benefit of the state of New York, of all gains or profits that the borrower may have made on each project where claimed illegality may have occurred.  All of this comes about, according to the judge, notwithstanding that the lenders suffered no financial or other loss, were not fraudulently induced to do anything, and were aware and comfortable with the notion that the banks are totally responsible for performing their own due diligence, securing of their own appraisals, and developing their own valuations.

In the Trump case, that approach has led to a claim that New York is entitled to recover for its own account (not for the account of any lender) the sum of at least $355 million, apparently just to teach Trump and others a lesson.  The findings reveal no evidence of the amount or extent to which any bank would have raised its interest rate if the guarantor’s (Trump’s) net worth valuation had potentially been reduced by various amounts.  New York’s entitlement to such recovery and the amounts thereof will assuredly be challenged on appeal for the above reasons and for constitutional, equitable, and other reasons.

Pre-emption

A remedy for the disaster being thrust upon normal nationwide borrower/lender policies and procedures may be for Trump and one or more of the national banks to seek a judicial or OCC determination that New York is prevented and pre-empted by federal law from utilizing its state law for the purposes and in the manner utilized in the Trump case or in any other specific manner that “prevents or significantly interferes with” a national bank’s exercise of its powers in connection with the Trump cases.  If any lie can put a borrower out of business, even if there is no reliance on it, the entire nature of loan transactions will need wholesale realignment, at great expense to both borrower and lender.

Consequences

Other extremely damaging consequences will befall banks and other businesses alike.

The Trump judgment has caused consternation in the business community, especially in the real estate sector, the mortgage sector, and other business lending sectors.  In cases where there may be claimed fraud or misrepresentation (material or otherwise), borrowers are now at great risk that New York will come after them for all their profits and gains on a project, notwithstanding that no one has suffered financial loss or damage.  The Trump case provides excuse and incentive and warning for borrowers, lenders, and other businesses to avoid subjecting themselves to similar outrageous claims.  That may, indeed, necessitate removing their businesses and all negotiations, contracts, meetings, and property from the jurisdiction of the state of New York.

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24 COMMENTS

  1. Everything about every current lawsuit or trial that President Trump is going through at the moment just screams a political set up.
    I had to ask my brother to leave my house the other month. He has the worst case of Trump derangement syndrome you have ever seen. When he said something about Trump, I objected with reasons he began raising his voice about how corrupt Trump is and told me so. When I tried to explain this actual case with him, he just refused to listen. At that stage it was not a disagreement over views, it had become a lecture by him, so I asked him to leave.
    Here’s the point. The number of people that are just like him is actually scarily high. For a guy who knows the NZ media is lying to us, he can’t figure that he’s brought the same lies about Donald Trump.
    His better half is an American too, and probably a Democrat voter.

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    • I have a ‘friend’ with similar thoughts. I said to him, There are some people who won’t be satisfied until Trump is dead and even then they’ll blame him for dying – are you one? He said I wasn’t being rational.
      At that point I’m sure he could hear my eyes rolling it was obvious what I thought of him.

      Glad he was not family, I have so few of them left.

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    • We had a tax/lawyer senior banker here with major TDS. She deals with large American clients but even understanding the US tax law the accusations “Trump doesn’t pay tax” wasn’t enough to force her to rethink that she is totally sucked in by propaganda. She believed the J6 “insurrection” was real and Trump was responsible! We showed her the video of Trump in the rose garden before any violence thanking MAGA people at the Capitol for staying peacefully and it was time to go home.

      Dr Jordan Peterson says people hate to have to change their minds. Admitting they were wrong and rethinking is beyond many.

      Newt Gingrich said “what the dems are doing to Trump is a financial assassination”

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      • The precedents that are being set by Demonrats, DOJ & FBI will come back to haunt them. Until recently I thought it would be moraly wrong for a 2nd term President Trump to do to Demonrats what they have done to him, now I hope he does and with persistent vigour.

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    • Agree. TDS is everywhere in NZ. After he”lost” the last election, I even had to listen to dimwits in Bunnings having a convo about how he’d have to leave the States in a helicopter like a tinpot dictator.

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  2. At a “town hall “ during the week Trumpy was asked by one of the audience how did he put up with this continual attack on him.
    He said he must be wired in a way that he deals with it.
    I don’t think there is anyone else that could be pursued persecuted and politically pulverised and still come out fighting.
    Amazing guy.

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  3. What I would like to know is how the State can claim to be a victim in this and therefore need to be recompensed with the proceeds of the fine ? If they cannot justify that, legally, then the case should be thrown out on appeal. But Trump and the others have to pay the fine before they can appeal, under state law. The same applies in a few other states except in California where you have to “pony up” with twice the level of the fine.

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    • NY is short of cash – the fine if ever paid goes to NY (Coincidence) if Trump wins (he will) he still loses probably $20 million as cost of bond, as next president do you think NY can look forward ot largesse from a Trump House and Senate or do you think the likes of Enmoron will be looking for a new job -( issuing cat licenses) unless he has taken up new residence in the dead centre of NY?

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  4. It’s not about what is right, it’s about destroying Trump. If they could assassinate him, they would, but that would be too obvious…
    The media and democrats are sick and have totally lost their minds when it comes to the truth.
    This whole thing is a last ditch attempt to eradicate Trump from America….and cook the next election…..America is heading full steam into a civil revolution….

    9

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  5. RUN -Move your NY business to a red state or stay and SHUT YOUR MOUTH in the face of dems tyranny while your customer numbers dwindle away as more and more New Yorkers move to find work in other states.

    https://www.youtube.com/watch?v=AW3TtiapC98
    “Loser State” – Reaction to NYC’s $355 Million Case Against Trump

    Patrick Bet-David, Adam Sosnick, Tom Ellsworth, and Vincent Oshana discuss New York Judge Engoron fining Donald Trump $355M in his NY civil suit.

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    • NY and Calipornia are seeing a mass exodus of the wealthy and sucessful business’s whcih will cost those states $Billions in lost taxes at a time of high inflation and declining business, NY could become insolvent like Birmingham UK should enough the exodus to Florida and Texas ccontinue unabated although its possible next election Caliprnia will go Republican, NY may just relecct the same r soles just like Wellingtom NZ, there is no cure for total stupidity.

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  6. ….. Trump scores easy knockout of Nikki Haley in South Carolina
    The former president’s win — which was so decisive that the AP projected him the victor solely based on a voter survey — came in the home state of his only major Republican rival, Nikki Haley. ….

    https://www.politico.com/news/2024/02/24/trump-wins-south-carolina-00143160

    Nikki Haley is staying in, despite the loss.
    It is to cost Trump, money, energy & time.
    She is blocking money that would go from the Republican Party to Trump for his campaign.

    Some one is bank rolling Haley, and looking to cause mischief.
    Somehow ginning up Democrats to temporarily become Republicans to vote in those Republican primaries.

    This will later cost the Republican party, as they will not know who is a Republican supporter as those faux Republicans will drain the Party resources & also give mis information on surveys etc..

    Just keep rolling on Trump, 🙂

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  7. A bit more of Nikki Haley

    Nikki Haley Caught In Series of Hilarious Lies on Fox News Iowa Town Hall
    https://youtu.be/D5mLibhHvts
    8 mins 27 secs : Jan 10, 2024 : Mark Dice :

    Nikki Haley was at a town hall event in Iowa hosted by Fox News last night where she spewed lie after lie.
    About Hillary Clinton inspiring her,
    and about lowering the retirement age to collect social security.
    Flip Flipping on nearly everything she previously said.

    An interesting aside by Mark Dice on how the government will look at those individual superannuation accounts, may need to be means tested, to place limits of draw down by the wealthy.
    Though as Dice said, it looks like the systemic government is chasing hard on the heels of bankruptcy.
    Though that leads to a short Dice advert for a financial book 🙂

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