Lawsuit Against Trump is Frivolous, and NY AG Letitia James Proves It
New York Attorney General Letitia James, who ran her campaign on finding something to criminally charge former President Donald Trump with, filed a $250 million dollar civil lawsuit against Trump, his children, executives, and multiple Trump entities, then she blew her case during the very press briefing called to announce the lawsuit.
She has spent the better portion of the last three years scouring every single nook and cranny of the Trump Organization in search of anything she could charge former President Donald Trump with.
Running for re-election, she filed a civil “Hail Mary ”lawsuit against Trump in September that ultimately paid off. She won re-election.
However, the lawsuit remaining in the aftermath not only shows her inexperience in federal banking regulations, accounting standards, and business valuations, but it’s outright unethical, a violation of civil rights, possible harassment, and outright frivolous.
Unfortunately, the only necessary evidence and prove of the foregoing is Letitia James herself and her petition.
James spent over half of an hour on September 21, 2022 making broad statements accusing Trump and his children of crimes and calling for all of them, including two Trump officers, to be banned from executive positions and banned from the real estate industry all together in addition to $250 million in civil fees despite there being no fraud, no damages, and no victims.
On the surface, the 220 page compliant filed in New York appears to be packed with “staggering fraud”, but the only thing “staggering” is how an attorney has failed so astonishingly at basic due diligence regarding financial analysis and valuation and federal financial regulation.
Her entire suit is based on fantasy math, unrecognizable as a legitimate valuation model, used to intentionally undervalue Trump assets and operations until the numbers were lower than the estimates she obtained from Trump and Trump’s vendors. That and the claim that Trump could not sell properties for higher values.
Bank Fraud Without Bank Fraud?
James’ entire case relies on the accusation that “Trump lied about the value of his assets” in a claim of “fraud” resulting in bank fraud because Trump could not sell the properties for what he claimed they were worth.
This means you are going to have to prove a century old multinational real-estate corporation can’t sell a property for their valuation and an attorney can not only accurately predict this, but can estimate real-estate and valuate corporation better than experts.
Your also going to have to prove they knew they couldn’t do this and intended to defraud the bank and that the bank was defrauded, which is going to be nearly impossible.
Granted, it has been held that Executive Law § 63(12) can be applicable without actual damages or victims, however, that requires actual fraud, not speculation.
None of these banks have accused Trump of fraud and the primary decision on loaning money is the ability to repay a loan, not the assets presented for stability. Loan officers can and do take assets into consideration, however, ultimately the only limitation to what a bank can loan a customer is 15% of the banks capital value and moreover, no bank accepts a valuation based on a customer estimate, or even a customers legitimate appraisal.
For example, it is not fraud to list your $600,000 house as an asset when it’s more likely going to sell for $400,000. That is not fraud, that is a speculative value and it’s meaningless.
However, it is fraud to take your past 3 paycheck stubs and bank statements, then doctor the numbers to double your income, and then submit those to the bank as originals. That is fraud.
The former cannot be fraud since it isn’t used for any gain. It’s not a deciding factor on whether or not to loan you money. When and if it becomes a factor, the bank is not going to rely on your estimated value, it will send its own appraiser.
The latter however, is not a speculative value and the altered documents submitted are the hard-proof of your income which is absolutely a factor, and in fact, the primary factor, in deciding whether or not to loan you money. Even if you pay them back in full, fraud still occurred.
Baseless Accusations
James examples several instances of the supposed “fraud”, none of which evidence any crime, victim, or damage, and they are supported by making up her own estimate of value and claiming fraud because the numbers don’t match.
In her closest to plausible example, she claims that Trump exaggerated the value of his apartment. However, the nearly 11,000 square feet quoted is the size of the 63rd floor and part of the 64th floor Trump occupied. The apartment now spans 3 floors, not just the 63rd, but the floorplans are not available so its difficult to know what the square footage was, however, the floors above the 63rd are not completely occupied by Trump and there are no other residents or occupants on the upper two floors. Even if these are storage or maintenance areas, if Trump owns them, they would be included in the square footage, so it’s unlikely the 11,000 square foot is accurate.
Regardless, it’s irrelevant. Square footage doesn’t dictate the price someone can sell something for. Best estimates value the apartment around $180 million. Far from what Trump stated. However, it’s not what someone else thinks it’s worth, it’s what you can sell it for. This wasn’t a falsified bank ordered appraisal. It was an estimate Trump thinks it’s worth and it’s irrelevant anyway, this was not being used as collateral and it’s the banks responsibility to appraise the value if the need it to consider a loan.
It just got worse from there, going from disingenuous to fantasy land.
New York Building Rent
She claimed that 12 units of stabilized rent were worth only $750,000, all of them combined, and that the value claimed by Trump was the non-stabilized value of the apartments. However, if the property is sold, once the tenant moves, the apartment can be non-stabilized¹ under New York law and sold at whatever the owner wishes to sell the property for or charge whatever rent the owner sees fit.
It does not matter if James thinks a buyer shouldn’t pay more than the stabilized value and Trump would be an idiot to do so. Thus the value was accurate and this accusation is baseless.
Vornado Cash
Then she spoke about the Vornado Partnership in which Trump listed as cash assets referring to his ownership or 30% of the company and his share of those cash reserves. James claims he had no control over these funds so they shouldn’t have been listed.
However, this is a limited partnership interest and this type of entity explicitly limits profits, losses, and valuations to that of the percentage of ownership.
Trump is taxed on that cash as if it were income and moreover, not only is that a valid cash asset, so is the valuation of that company and all of its assets. He can even claim a loss on the depreciation of those assets on his taxes. So this claim is also baseless.
Bank Appraisals
She made various other claims stating years following bank appraisals, property values were listed at higher values, like almost every property in the world would be, and the appraisal was not requested by the banks. These were estimates, not bank appraisals. If a bank wants to get an appraisal, they can do so, but this is not the primary factor that decides a loan unless the building itself secures the loan.
Notably the only time this is a requirement under the FDIC is when the loan is greater than 1 million and the property itself is being used as collateral.
The Big Mar-A-Largo Lie
The most ridiculous whopper James presented was the valuation of Mar-la-go. James made the absurd claim that the resort was worth $75 million when the profit revenues of the company alone are $25 million (per James).
Fortunately for businesses throughout the United States, the secret James valuation method is not a viable model. Based on her own raw data, using a viable model, the property would be valuated at approximately $125,000,000 million on revenue alone, much less asset valuation which would also compound.
That doesn’t even include the property value, which Forbes valued at around $160 million in 2018. That’s nearly $300 million together right there.
Running the numbers based on the data provided by James herself, the true valuation based on the profit alone would be $439,305,446, plus the value of the property which is $160,000,000, and without any multiple of assets, this comes to a grand total of $599,305,446, and could actually be valuated up to over $900,000,000 with other valuation models. The Trump estimate is arguably undervalued.
The James valuation is ridiculous fantasy assessment not even remotely close to it’s true value and it’s about as ridiculous as estimating the value of a new Ferrari at $1.35.
To put how ridiculous this is into perspective. This property next door to Mar-A-Largo is a modest house worth $50 million (See below).
This is a slightly larger home worth $64 million (See below).
However, this is Trump’s Mar-A-Largo (See below):
According to James, you can purchase the entire operation for a mere $75 million, only $11 more than the previous $64 million dollar house shown which looks like it could almost fit in Trump’s pool. The property includes a golf course as well. Perhaps the Secret James Valuation Model tosses that in for free.
That is how ridiculous the claim is.
This is despite the deed restriction assumption made by James which is not even needed for the higher valuation and completely irrelevant. This claim is so blatantly and intentionally misrepresented it could easily be considered unlawful and frivolous and may be the most damaging to the James case.
This discrepancy is evidenced by others as well, Forbes recently released a 2022 report²² outlining the “definitive” net worth of Trump where Mar-A-Largo is valuated at $325,000,000.
Then, She Blows Her Entire Case
She then dropped a bomb… on herself. If the foregoing wasn’t bad enough, her next statement may have completely demolished her entire case by contradicting her previous statements.
James made the argument for over 20 minutes that Trumps estimates were overvalued and he could not have sold these properties for what he claimed.
Her last task was claiming Trump profited from the alleged fraud and for this, she outlined the Old Post Office, a Trump property that real estate agents and experts claimed was a losing investment and was not a property worth nearly what Trump was selling the lease for.
However, Trump managed to sell the property lease for a profit of $100,000,000 dollars in a record breaking sale for $375,000,000 in 2022.
Thus, after 30 minutes of claiming Trump could not do this, she proves Trump can do this.
During the press conference, she appeared to be noticeably rattled after making the statement and the shaky presentation thereafter lasted the duration of the remainder of the announcement.
It Gets Even Worse
Somehow, James is claiming the victims here are … big banks. Not only that, but this somehow damages the state of New York and as she put it “cheated all of us”.
Yet, not one single bank or insurance company has filed a single complaint, they have been paid in full, with interest, and ultimately contributed to the New York economy which would contrarily appear to benefit “all of us”.
Furthermore, it is the bank who is responsible for due diligence and ultimately their decision regardless. If a person with an average income walks into a bank and asks for a loan and they list a car as an asset worth $25,000 and the Blue Book value is $10,000, then it is the responsibility of the bank to determine what the bank feels the car is worth. Property of any kind is worth what it can be sold for, period.
Banks make decisions primarily on an ability to repay a loan. The Trump Organization has a proven track record spanning nearly 100 years that shows they can do that. Whatever estimates are put on applications are irrelevant if they are within reason and if a bank needs clarification, they can and do have an appraiser estimate the value. James herself provided evidence that they were all within reason by outlining the Old post Office sale.
Moreover, despite all of this going on and in full display to the public as James has been very vocal for the last three years, in February of this year, Trump obtained yet another loan for $100,000,000 dollars from Axos Bank.
Mike Offit, a former Deutsche Bank lender to Trump had this to say:
If a guy brings me a property with good cash flow, a good location and good tenants, why do I care what his politics are? Trump has good buildings and manages them well.
The one thing banks do not do, is determine whether to loan a company based on their previous CEO’s political preferences and opinions.
There doesn’t appear to be a case against Trump here, much less any of his employees, and the claims against his children is overreaching to the point it’s puzzling and makes this case look purely political.
Self-Destructive Lawsuit
The New York Attorney General has filed a lawsuit that is borderline, if not completely, frivolous and one that appears solely politically motivated for her own political benefit. This is a civil lawsuit with no victims, no damages, and no lawful premise.
Trump attorneys are likely salivating over this case and this video will most certainly be presented to the Judge which could potentially land James in hot water regarding ethics violations.
The best possible advice for James would be to recuse herself from the case moving forward and let somebody else take over.
It is a mathematical certainty that the response to this petition is going to be brutal for James because anyone with business valuation experience is going to easily destroy this petition which will highlight the incompetence of James, but likely be spun into accusations of unlawful actions.
The other major problem, and one major thing James failed to mention was the two page disclaimer the Trump Organization submitted with it’s financial statements that explicitly states the estimates are from the Trump Organization only and are the organizations speculative estimates that may be inconsistent with appraisal values or incorrect. However, even without this disclaimer, it still would fail to meet the definition of illegal fraud.
If James decides to recuse herself she may be able to avoid scrutiny leading to legal action, but if she continues pressing on she potentially faces ethics violations and more legal challenges of her own.
Letitia James is no stranger to legal trouble and currently has multiple lawsuits against her and a potential criminal probe by the Department of Justice instigated by Andrew Cuomo. She could face potential federal felony charges for violating tax and privacy laws related to the Nikki Haley² leaks. In addition to facing legal actions, a criminal investigation into illegal practices, she also has recent complaints of at least 7 ethics violations filed against her, many of which appear to have been repeated in the Trump case.
The Criminal, Civil Charges
The press release James circulated expands on what exact laws were allegedly violated.
The OAG alleges fraud and illegality under 63(12) in connection with the defendants’ conduct in preparing the statements and submitting those statements to financial institutions to obtain financial benefits. As part of demonstrating illegality under 63(12), OAG alleges that Mr. Trump and the other defendants violated state laws…
- Falsification of business records in violation of Penal Law § 175.10;
- Issuing a false financial statement in violation of Penal Law § 175.45;
- Engaging in insurance fraud by submitting false and misleading information in a written application for insurance and to obtain other insurance benefits in violation of Penal Law § 176.05;
- Engaging in a conspiracy to commit each of aforementioned state law violations.
These are easily defended and baseless. Regardless of viable valuation methods explained, they are not even needed to defend these laws because Trump submitted a disclaimer with each financial statement.
- § 175.10 requires intent for which the Trump disclaimer covers.
- § 175.45 requires “intent to fraud” which is not possible with disclaimer
- § 176.05 requires “intent to fraud” which is not possible with disclaimer
- Conspiracy to commit fraud requires intent to commit fraud, this is not applicable.
The other law listed is § 63(12) which also, requires intent.
Even without a disclaimer there is still no fraud and these statues are inapplicable. James herself has proven that Trump can indeed make sales at these high estimates, so it is going to be hard to argue a case of intentional fraud when there is proof otherwise.
Another wild claim made by James is Trump committed fraud by including intangible items, such as brand premiums, when calculating an asset’s value, despite representing in the statements that such items were not included.
First of all, this is not a law, it is an accounting standard. She is referring to internally-generated brands and this can be an accurate claim. For example, Apple cannot list “Apple” as a brand asset due to being internally-generated.
However, this is not applicable to Trump. Trump is Trump’s last name, it’s not internally-generated, and the Trump brand is indeed a measurable asset given the fact that it’s licensed to other entities and that business alone is valuated at approximately $54 million which proves value and a brand premium and there’s countless examples worldwide to prove it.
Suing Trump personally is also challenged by statutes of limitations. The lawsuit is claiming fraud between 2011 through 2021 where only 2016 through 2022 would be applicable and Trump has not been the CEO of the Trump Organization since 2016 or even involved with the organization at all during the four years he occupied the White House.
Final Thoughts
This honestly looks less like a legal petition and more like an abuse of power and intentional violation of civil rights. The complaint even provides evidence of the Attorney General behaviors which could be considered harassment, which was a claim Trump made in a lawsuit against James before any of the information in the petition was released.
It will most certainly be brought to the judges attention in the appeal and it certainly looks damning.
The petition is well over 200 pages long and the foregoing is the reflection of the press briefing and interpretation of the applicable portions of the complaint. However, there may be a viable complaint buried somewhere in the petition that could offset the seemingly frivolous claims and potentially hold up in court.
If such a claim exists, another attorney should follow through with the suit and not James. She should recuse herself to avoid potential damaging repercussions, especially considering her own legal problems, many of which involve alleged illegal activity and accusations of the abuse of power.
This would also limit the Trump defense teams ability to claim political motive if the case survives the first motion for dismissal or recusal based on these grounds which is almost certainly being drafted.
James could additionally face ethics violations and sanctions for unlawfully filing the petition if she continues and even attorneys from her own party have warned her repeatedly on the former and as recently as the day of this filing on the latter.
James closed her press briefing announcement with a statement that my come back to haunt her.
“Claiming you have money you do not have does not amount to the art of the deal. It’s the art of the steal”
Yet, the only discrepancy is created by James herself by devaluating Trump’s assets below the submitted corporate estimates she already had the numbers for, and then claimed it was fraud because her number is lower while legitimate valuation models indicate Trumps valuation are accurate or within reason.
That’s not the art of the steal, that’s the art of the Attorney General filing a frivolous lawsuit for political gain and potentially resulting in several ethics violations³.
Nevertheless, James appears desperate and determined to continue to argue that repeatedly borrowing money from banks and paying it back is evidence of fraud and a crime in New York.
Everyone else on Earth would call that good credit.
References
- New York Rent Stabilization
- Nikki Haley Leak
- Ethics violations:
Rule 1.11(a)(2), Rule 1.11.(b)(1), Rule 8.4(c), Rule 3.6(a)(b),
Rule 1.7(a)(2), Rule 3.1 (a)(b)(1), Rule 4.1, and Rule 4.4 (a) of the
New York Rules of Professional Conduct, 22 N.Y. COMP. CODES R. & REGS. tit. 22, § 1200.0. - James Press Release
- Cuomo Ethics Complaints
- Penal Law § 176.05
- Penal Law § 175.10
- Penal Law § 175.45
- Brokamp v. James (1:21-cv-00389)
- National Rifle Association of America v. James (1:20-cv-00889)
- New Hope Family Services, Inc. v. James et al (5:21-cv-01031)
- Chrysafis et al v. James (2:21-cv-00998)
- Upsolve, Inc. et al v. James (1:22-cv-00627)
- Malek v. James et al (1:22-cv-00913)
- Lewis v. James (1:22-cv-00532)
- Vanchoff et al v. James et al (2:22-cv-04075)
- Carota v. James et al (1:22-cv-00949)
- Town of Babylon, NY et al v. James (2:22-cv-01681)
- Moalawi v. James (1:22-cv-06770)
- New York State Telecom Association, Inc. et. al. v. James (2:21-cv-02389)
- Mitchell v. James et al (1:22-cv-03791)
- Forbes 2022 Trump Net Worth
- Image 1: Gothamist/ Spencer Platt/ Getty Images
- Image 2: Forbes
- Image 3: Barron’s
- Image 4: Shawn Hood Media
- Image 5: ABC News