New York’s Trump Fraud Findings Refute Judge’s Conclusions: And the entire New York real estate market is noticing with justifiable alarm.

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 was proven.

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.
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.
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.

It should be understood that banks charge different customers different interest rates when it comes to large commercial loans. Those rates depend upon multiple factors including, but not limited to, the loan application valuations of assets. In essence it is merely a negotiation. To criminalize a negotiation exhibits an intentional misapplication of the duty of lawmakers to fully understand the nature of the business they are trying to regulate.

The most damaging aspect of this case is that every business owner in New York has been put on notice that the State of New York considers itself a party to every financial transaction in the state -- and one that will aggressively pursue civil cases as an "injured" party even if no harm can be shown.

Effectively a Sword of Damocles hanging over their heads. Nobody wants that potential risk. The minute the state gets mad at you, they can pull out this Trump prosecution trick.

The organized crime world couldn't have asked for a better incentive for businesses and their customers to operate entirely in a black market underground economy.

I have long believed that many of our governments are not terribly different from Mafias.

I don’t believe that will be true. There are many radical law students that are seeing this and will use this new weapon and variations of it, in the not to distant future, to destroy any person or company that stands in the way of their agenda.

I think the original intent of this prosecution was solely to get Trump, and nothing else, but it is obvious that over time they will start to see it as a tempting manner of pressuring other real estate developers to do what they want, and would therefore come into more common usage, *IF* they are allowed to get away with this.

if any estimate of a property’s market value, NO MATTER HOW WRONG, is called a lie and a fraud,

what about property tax appraisal agency, if they generate an incorrect valuation? That appears to be covered by the Judge’s fraud ruling. So time to sue NY property appraisal agency if they generate the wrong value. Sell your property for less then the appraisal? Sue for the difference!

RE: what about property tax appraisal agency, if they generate an incorrect valuation?

Tell me about it. Long Island ( where I live ), has a convoluted system of property appraisals where your home is ALWAYS valued by the county VERY HIGHLY for the purpose of paying higher property taxes ( which is one of the highest in the nation I pay about $14,000 a year for your reference ).

The only remedy here is to make use of the GRIEVANCE SYSTEM put in place that allows you to hire property tax lawyers to help you GRIEVE your taxes and when successful, you pay the lawyer a small percentage.

This convoluted system has been going on for YEARS.

The point is — property valuation is NOT a science and anybody ( much less Letitia James ) who claims that he or she KNOWS better then the banks or the professional appraiser or THE MARKET how much a property is worth is delusional, evil or both ( I vote BOTH when it comes to Trump’s case ).

Sell it and run.

Move your headquarters out.

This is lunacy and people in the business know it.

Who is John Galt territory.

Unless this is thoroughly rebuked, NY has officially moved to a fascist state.

So glad I left that hellhole.

I believe all courts in NY are corrupt so any appeal will be denied up to and including the “NY Court of Appeals”.

Second, in any situation where people need to leave immediately, being the first out, gets out. Use the Titanic as an example. Everyone needed to get off the ship, but the first lifeboats that left were mostly empty and at the end overflowed with people left behind. In the 1930s bank runs, those out first were okay, the masses that came later screwed. The first major sellers should be able to get out of NY relatively intact. Those that wait, defer, hope, will be left behind.

Why not use the same laws against the State?

New York borrows money on a regular basis. In order to secure funding, it has to use estimated tax receipts as a basis for borrowing. Since the tax receipts are based on an estimate and are usually adjusted downward when the actual tax is collected, isn’t this the same as overstating the assets of the State and the Governor and Treasurer of the state should be charged with fraud against a financial institution?

How about auction houses like Sotheby's?

President Trump has said in the past that he has "brand value" that makes Trump properties more valuable just because it's a Trump property.

As a case in point, in 2015 John Lennon's 1962 J-160E Gibson acoustic guitar was sold at an auction in Beverly Hills, California for $2.41 million. The catalog price for that guitar in 1964 was $219.50 and the current value of one in excellent condition is $4,000.

If I had owned that guitar in 2015 and chose not to auction it and instead used it as collateral for a loan claiming a value of $2.5 million, would Letitia James sue me because the real value of the guitar is $4,000?

Does John Lennon's "brand" add $2 million to the value of the guitar?

Let's sue Sotheby's for fraudulently inflating the bidding on old furniture and jewelry that has provenance. In New York, the items can't be inflated based on who owned them previously or it's fraud.

it is obvious that over time they will start to see it as a tempting manner of pressuring other real estate developers to do what they want

Just look at the aftermath of the Kelo v City of New London CT case of eminent domain for "public good" to take private property from one owner and give it to another private owner just to increase the tax base.

In Kelo, SCOTUS approved New London blighting and condemning a suburban bedroom community in order to turn the property over to Pfizer to build a research center.

Immediately after the Kelo ruling, town councils along the south Florida Intracoastal Waterway began condemning the homes of Floridians who had been living there since the 1960s in order to turn the property over to developers of yacht clubs. Quoted one person, "The land was too good for the people who owned it." In Florida, the homeowners banded together and sued to stop the eminent domain seizures.

That's what will happen if this ruling stands. Hochul can say all she wants about it being a one-off, but as soon as cities and towns think they can force wealthy businesses to pay "fines" after completing negotiations where initial offers were deemed to be too high, it will spread everywhere.

-PJ

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