TRUMP's FRAUDS AND FINES
Blowing Up Trump’s Brand and Finances
Who are you going to believe – Trump or your own eyes?
A version of this article was first published on October 2, 2023, by The Globalist.
Subsequent to the publication of this article, the New York trial concluded and a judgement was announced, which Donald Trump is appealing, that banned him and his sons from doing business in New York State for three years, that banned the Trump Organization from borrowing from new York banks, that established a monitor to take charge of the company, and, among other penalties, imposed a fine on Donald Trump of $355 million plus interest (interest that has been estimated at around $100 million).
By Frank Vogl
The trial that could financially bankrupt former U.S. President Donald Trump is starting in New York. It can damage his ego and his image. It will expose him as a giant fraud.
Its potential political impact on the course of the U.S. presidential election campaign could be formidable.
Not to be missed
The assuredly sensational trial – which could take several months – might also, eventually, reveal the true sources of Trump’s financial backers.
For years, bankers in New York have stopped lending him cash. Deutsche Bank was the last loyal creditor and it ceased several years ago. Yet, the Trump Organization has continued to do deals, often based on securing loans on the back of massively inflated property valuations.
The trial stems from an indictment brought in September 2022 by New York State Attorney General Letitia James against Trump, his children Ivanka, Donald and Eric and senior Trump Organization employees. It asserts fraud in the valuations of 23 major properties and other assets.
In response to Trump’s persistently wild claims about his supposedly vast wealth and the enormous values of his properties, including his homes, a New York judge felt bound to quote Chico Marx of the Marx Brothers, playing Chicolini in the film “Duck Soup” where he says: “well, who ya gonna believe, me or your own eyes?”
How big is your home?
For example, for years, Trump has lived in a lavish triplex apartment in Trump Tower on Fifth Avenue, New York City.
The apartment has been independently measured to be 10,966 square feet, and yet between 2012 and 2016 Trump reported that the actual size was 30,000 square feet, which resulted in an overvaluation of between $114 million and $210 million.
New York Judge Arthur Engoron, who is presiding over the Trump property case, noted in a 35-page judgement on September 26, that Trump’s lawyers asserted that “the calculation of square footage is a subjective process that could lead to differing results or opinions based on the method employed to conduct the calculation.”
To which the judge responded: “Well yes, perhaps, if the area is rounded or oddly shaped, it is possible that measurements of square footage could come to slightly differing results due to user error. Good-faith measurements could vary as much as 10-20%, not 200%.”
The charge and the claim
The key charge brought by Attorney-General James is that Trump and his associates:
“Falsely inflated his net worth by billions of dollars to induce banks to lend money to the Trump Organization on more favorable terms than would otherwise have been available to the company.
To satisfy continuing loan covenants. To induce insurers to provide insurance coverage for higher limits and at lower premiums and to gain tax benefits, among other things.
From 2011-2021, Mr. Trump and the Trump Organization knowingly and intentionally created more than 200 false and misleading valuations of assets on his annual Statements of Financial Condition to defraud financial institutions.”
The scale of the humiliation being sought by Attorney-General James is highlighted by some of the demands that she is making in the event that the presiding judge at the trial rules in her favor.
These include: Permanently barring Trump and his children from serving as an officer or director in any New York Corporation, barring them for five years from entering into New York commercial real estate acquisitions, barring them and the Trump Organization from securing any loans from any New York financial institution and a fine of “at least” $250 million.
The case in context
Trump faces 91 criminal charges. These range from orchestrating a conspiracy to undermine the outcome of the last presidential election and secure his return to the White House, to stealing government documents concerned with ultra-secret matters of national security to secretly paying-off a mistress.
Trump’s constantly changing teams of lawyers are striving to ensure that all of the criminal trials on these cases are indefinitely postponed. Trump believes that if he can push these cases off to 2025, he will have won next year’s election and be back in the White House and can simply pardon himself.
That is questionable. What is certain, however, is that he can neither delay the fraud case in New York nor ever have political power to overturn whatever final judgements the New York State legal system determines. This is a civil, not a criminal case. And while the Trumps will not go to prison, they may be financially ruined.
Follow the money
Trump’s political brand has been largely based on his claim to be a brilliant, independent billionaire tycoon. For decades he has made grand claims about his wealth. Being seen to be rolling in money has always been at the top of Trump’s megalomaniac agenda.
The money has come, as it does for so many property developers, from loans. To secure vast lines of credit to buy more properties and finance existing mortgages, Trump and the Trump Organization hugely overvalued their properties.
From 2011 to 2021, the Palm Beach County Assessor appraised the market value of Trump’s Florida home, Mar-a-Logo, at between $18 million and $27.6 million. Donald Trump’s submission to authorities valued the property at between $426.5 million and $612 million.
Judge Engoron noted that in considering valuations at “Trump Park Avenue” in Manhattan for the years 2014-2021, the Trump Organization “inflated the value of each unit (apartment) between as much as 700% (in 2014) and 64% (in 2021).”
Then, while the prominent Cushman & Wakefield property company appraised the value of Trump’s property “40 Wall Street” in 2015 at $540 million, the Trump Organization reported the value at $735.4 million.
The tales of over-valuations of golf clubs, property licenses, other real estate deals and business partnerships litter the judge’s statement and the original 222-page indictment brought by Attorney-General James.
The trial
Ahead of the trial, Judge Engoron brushed aside all arguments made by Trump’s lawyers for delay and his verdict has been supported by the New York Court of Appeals.
Judge Engoron determined the fraud was so evident and so great that Trump and his clan must immediately give up rights to control many properties (but he did not specify which ones or how this is to be accomplished).
He also determined that, in fact, the trial will focus more on potential damages against Trump than on whether or not fraud has been committed.
Trump is not going to let these decisions go unchallenged. Part of the defense argument is that Trump is so important that at any time he can call upon friends in Saudi Arabia who would be delighted to pay for his properties at whatever valuation he determines.
In the past, his lawyers have argued that there are many billionaires, such as Elon Musk and Bill Gates and others worth more than $10 billion, who would be eager to pay an enormous amount to buy Mar-a-Lago from Trump.
Russians in the background?
Trump tried some years ago to build a hotel in Moscow and his admiration for Vladimir Putin has long aroused suspicions about his business dealings with Russian oligarchs.
There is no evidence to support such claims. And it is quite possible that some of the wealthiest oligarchs who could bail-out Trump, and whom Putin might encourage, are currently on the U.S. sanctions list and hardly in a position to help Trump.
Nevertheless, if the trial goes ahead in the way that Judge Engoron envisages, and as Attorney-General James plans, then Trump will be forced to sell a large number of his properties.
He will have to raise one-quarter of a billion dollars to pay fines and then strive to sell assets at more than bargain-basement prices. Unless he can get good deals, he may well have staggering large debts to tackle.
If the courts are involved in ensuring that the sales of Trump properties are orderly, then at last it may be possible to discover who have been his biggest creditors in recent years – Saudis? Russians? …