Trump Built an Empire on Financial Fraud | Opinion

Donald Trump Caricature by DonkeyHotey, via Wikimedia Commons.

Summary judgments are a tedious exercise in law and distillation. Following many months of written discovery and verbal testimony, a party who moves for summary judgment argues that no facts remain in dispute, the facts on the record are ready to be applied to the law, and the case is ready for a decision on the merits. Such was the posture of both sides in the New York Attorney General’s financial fraud case against Donald Trump et al.

If any material facts are disputed, summary judgment is inappropriate, but the “factual dispute” must be credible. For example, if both sides agree an apple was red, not green, the judge assumes the apple was red; if its color is disputed even though there are photographs of the very apple, the judge may reject any challenge to its color as too far-fetched to be credible.

Judge Engoron, granting summary judgment in part to New York, rejected Trump’s attempts to spin the color of the apple, and held that Trump’s Statement(s) of Financial Condition (SFCs) said what they said, despite strenuous arguments from defense counsel that they said something else. SFCs, for those who don’t operate in high finance, are financial statements submitted annually to contractual lenders, insurers and business affiliates to reflect current financial conditions. They are not copies of last year’s report; what is reported in each annual SFC could materially alter the terms of loans, insurance, tax rates, and other business agreements.

Written valuations mean what they say

In ruling that the color of the apple was too obvious to question, Judge Engoron determined that Trump & Co. fraudulently manipulated real estate values to drive favorable business terms over a span of more than 10 years, to wit:

Mar-a-Lago- In 1993, Trump sought and obtained permission from the Town of Palm Beach, Florida, to turn Mar-a-Lago into a social club instead of a private home, in exchange for a significantly lower property tax rate.  From 2011-2021, the Palm Beach County Assessor appraised the market value of Mar-a-Lago at between $18 million and $27.6 million, given the land use restrictions. Trump ignored the use restrictions that he personally put in place, and submitted SFCs to lenders that valued Mar-a-Lago between $426 million and $612 million, an overvaluation of at least 2,300% for those same years.

The Trump Tower Triplex - Trump has lived in his three level residence at the Trump Tower for decades. Although his apartment is exactly 10,996 square feet, Trump SFCs claimed it is 30,000 square feet, resulting in an overvaluation of between $114-207 million dollars each year. In their summary judgment argument, Trump counsel argued that measuring length times width was a “subjective” process.

Seven Springs Estate - Market values from professional appraisals in 2000, 2006, 2012, and 2014 valued Seven Springs at or below $30 million.  However, because the Trump Organization was considering donating a conservation easement, Trump’s 2011 SFC reported the value to be $261 million, and his 2012, 2013 and 2014 SFCs reported the value to be $291 million, inflating his potential donation values by over 400%.

Judge Engoron’s ruling identified several additional Trump properties where the values were similarly manipulated. As to these and other stated values, Trump’s counsel argued that the New York Attorney General could not sue over them because the subject transactions were between private entities, and everything came out alright in the end- e.g., nobody lost money.

Trump counsel argued strenuously that the red apple was green

Trump’s lawyers offered other nonsensical defenses throughout, including that current values reflected in the SFCs were “aspirations” of future market values, claiming that if the values of the property increased in the years after the SFCs were submitted, then the numbers were not originally inflated. They also argued that their valuations were expressly disclaimed through a “worthless” clause in the SFC(s) explaining that valuations can vary, depending on methods used. Judge Engoron rejected that particular spin because, “The [worthless] clause does not use the words ‘worthless’ or ‘useless’ or ‘ignore’ or ‘disregard,’ or any similar words. It does not say, ‘the values herein are what I think the properties will be worth in ten or more years.’ Indeed, the quoted language uses the word ‘current’ no less than five times, and the word ‘future’ zero times.”

After comparing Trump’s SFC valuations to market appraisals provided to Trump & Co. in real time, the judge ruled that Trump and his co-defendants had engaged in a clear practice of fraud going back to at least 2010. Six remaining claims as well as disgorgement will be argued at trial, set to begin next week.

Meanwhile, Trump will continue to tell his supporters that the red apple is green, and really there’s no such thing as a red apple because, at some point, all apples eventually turn brown.

Sabrina Haake is a 25-year litigator specializing in 1st and 14th Amendment defense. Her columns appear in OutSFL, Chicago Tribune, Salon, State Affairs, and Howey Politics. She and her wife split their time between South Florida and Chicago. Follow her on substack.


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