Judge orders Trump to pay nearly $355 million in civil fraud trial

Why do financial laws exist? Hopefully to help level the playing field and help give everyone an equal chance to succeed. Read the judge's ruling. It's clear Trump didn't think the laws applied to him.

How does this harm others? It makes it more difficult for them to succeed. Think of it in terms of the game Monopoly. Say there is one player who thinks he's above the rules and declares he gets $300 for passing Go, and only ever has to pay half of any tax bill. That would give this player unfair advantages. If you complained, and their response was you aren't being harmed because you still get $200 for passing Go and don't pay extra on your tax bills, would you accept this?

The Trump Organization was clearly cheating. The CFO was put in jail for it, and now, the Org has to pay hundred of millions in fines for their actions.

 

According to the linked article, the couple who started the GoFundMe Page also have given $30m to the Church of Scientology. I wonder which cult they identify most with?

 

Nothing in the ruling that would prevent Trump from going out and getting a job.

 

Too bad we don't have some kind of process for laying out all the evidence and coming to a decision based on the evidence and the relevant laws.

 

I'm not disputing the existence of any evidence .... but what is the specific nature of said evidence that some are claiming exists? If someone asserts "the market' was adversely impacted by Trump's fraud ... what specifically are those adverse impacts?

Do you know what they are? Please post so we'll all know. Thanks in advance for your assistance.

 

My question is what financial institution hands out hundreds of millions of dollars in loans to one borrower without strenuously underwriting the veracity of said borrower's stated asset valuations? After all, even independent certified appraisers can have a wide variance on opinion of value for an ordinary single-family residential home. In this case, we're talking about commercial properties which are subject to extreme whims of the market on a regular basis.

If the borrower secured a lower interest rate from the lender based on exaggerated and unverified asset valuations, the onus was on the lender to underwrite those details to verify the veracity of such stated valuations. The lender is setting the interest rate at which it feels comfortable that a profitable hedge against default is in place.

My guess is those stated valuations were underwritten, perhaps not to the lengths they should have been, but nevertheless they were and in the name of turning a nice profit, the underwriters approved the loans for Trump. I do not see how, for example, a judge sitting behind a bench, who has never appraised a commercial property, can pinpoint exactly what a plausible range of value for a particular property was 10 years ago. Especially when property valuation is entirely subjective from the start. When looking at commercial property, value is inferred from its location and future profitability. I don't see how even a certified appraiser could prove that. They can guess, but prove it? No. That's why they call it an "opinion of value".

 

So, I've scanned the 96 pages of the county judge's finding on the Trump fraud case ... and these are the penalties assessed based upon one person's analysis to determine the Trump Organization's (TO) "ill-gotten gains" arising from TO's ongoing misrepresentation of the value of assets in numerous SFCs (Statements of Financial Condition) filed by the TO with financial institutions that loaned $$ to the TO.

Interest savings on the Doral Loan - $72.9 MM
Interest saving of the Old Post Office Loan - $53.4 MM
Interest on the 40 Wall Street Loan - $24.3 MM
Interest savings on the Trump Chicago Loan - $17.4 MM
Gain in Old Post Office asset sale - $134.9 MM
Assignment of Ferry Point license - $60.0 MM

Total - $362.9 MM + pre-judgement interest accruing from various dates

So .... the county judge decided the TO saved interest costs on real property loans ..... located in Florida, Illinois, DC, Bronx County NY, and New York County NY ..... as a result of the alleged fraudulent misrepresentations and those saving should be paid to New York County.

Further, the county judge decided that because the TO been was paying lower interest rates than it should have been paying .... it would have lacked sufficient cash and net worth to acquire the Old Post Office asset and sell it for a $134.9 MM gain ..... so that gain should be forfeited to New York County.

Further, the county court judge decided the TO was only able to acquire the licensing rights for the Ferry Point golf facility because of the alleged fraudulent misrepresentations so .... the gain of the transfer of that license should also be forfeited to New York County.

Nowhere in the ruling is there any evidence the TO wrongdoings had any impact .... especially adverse impact .... on any market in any fashion. So that assertion is just frivolous pablum.

So, whether you like the TO or not .... you can evaluate the substance of the various transactions discussed at length in the ruling and decide for yourself if NY's discouragement laws, as utilized/applied in this prosecution, were done so in politically-unbiased, honest, reasonable and equitable fashion.

 

What is your basis for claiming bias?

Having dealt with NY Supreme Court judges I’d classify a number of them as incompetent, especially the one I’m currently dealing with. I mostly just scanned the decision and saw nothing that would lead me to believe this particular judge is incompetent or biased.

 

Exactly, these laws are on the books for a reason. It's not like they were put in place just for this case. We get it, the laws don't apply to him because he's spayshul.

 

So, the lenders skipped out on $168 million in profits by neglecting to underwrite the property valuations the TO represented? That's what this judge is saying happened?

 

No, the judge is saying the TO committed fraud by intentionally misrepresented the valuations of its properties to obtain favorable rates. Testimony from at least one bank that it wouldn’t have loaned him money if they’d known the true financial state was presented. Other banks cited his SFCs as a primary reason for the loans. SFCs are intended to be relied upon and is one reason CEOs and CFOs have a lot of trepidation signing them as misrepresenting financial documents can have serious repercussions.

 

But most of this "true financial state" was predicated on stated values of properties in the TO's SFCs, which are obviously subjective and arbitrary at best. Most people think their property is worth more than it is. If the lenders relied solely on the SFCs to make a determination of Trump's net worth and didn't do their own due diligence, well then that is just shitty underwriting. We're not talking about pay day loans here.

Further, I find it laughable the lender can tell the court what the interest rate should have been on these loans. Ostensibly, based on their own hindsight estimated valuations. Yet, they didn't take the time to make these same valuation estimates prior to approving the loans to the TO. I wonder what justification the lenders used to calculate the differential in interest that should have been paid and how they have arrived at those valuations now, considering they didn't even bother to opine on the values at the time of loan consummation.

 

I may be getting his court cases mixed up but didn’t he include the value of a 30,000sf apartment in trump tower when it was only one-third that size? Even a state court judge could see the difference in that.

 

Give me a break. If you're telling me the underwriters looked at the square footage on his SFC and said "welp, must be accurate, nothing else to look into here", then you don't understand how banking works. It takes all of 2 seconds for an underwriter to pull up property records to verify square footage. In fact, public records would be a given, as underwriters have to verify ownership of any properties listed. Do you think banks write multi-million dollar loans without underwriting all of this?

Keep going though. This is fun...

 

Don’t know what the banks did or didn’t do - do you? I do know he tripled the size of his residence on paper. To me that shows some intent to defraud.

 

It's always someone else's fault. Never any personal accountability for Trump. Poor victim, once again.

 

Of course there is underwriting. How detailed/in depth it is depends on the client. Let’s say the bank screwed up and didn’t conduct their underwriting process as in-depth as it should have. So what? It doesn’t change TO’s fraud.

 

Do you know that? Can you demonstrate Trump himself fictitiously tripled the size of his residence on his statements to the bank with intent to defraud? If so, why isn't this being tried criminally?

I do not know exactly what the banks did or didn't do, but I can tell you if they didn't underwrite this low hanging fruit then, they don't have any credibility in claiming the TO's interest rate should have been higher on their loans now. And that is material to this case, as it is a civil case relying on the preponderance of evidence and the preponderance of evidence wasn't even looked at by the banks prior to making the loans.

Put another way: if these banks didn't bother underwriting the TO loan application, then that means (arguably) they don't bother writing anybody else's loan applications. Which means they are making huge consequential business decisions every single day without doing any due diligence. Which means they have almost zero credibility in opining what a borrower's interest rate should have been, because they don't underwrite their loans in the first place. How can you argue one borrower should have been paying a higher interest rate when you haven't verified the veracity of all of your other borrower's applications and financial statements? Perhaps they are all inflating their net worth, which is likely true, at least to an extent.

 

Deutsche Bank announced they will loan Trump the $355M so he can comply with the judge's order