When I was young, the New York Attorney General’s office had a reputation for integrity. But somewhere along the line, the office went completely off the rails. Eliot Spitzer was elected AG in 1998, and spent his two terms in frightening misuse of the office to further his naked political ambitions, mainly through shaking down financial institutions on the thinnest of pretexts. After eight years improperly using this tactic to keep his name in the headlines, he was then elected Governor; whereupon his successor — Andrew Cuomo — followed the same playbook for one term, and with the same result of becoming Governor. The next guy, Eric Schneiderman, was, if this is even possible, the worst of the three in the category of politicized prosecutions and shakedowns. Mercifully, Schneiderman was forced from office in a sex scandal before he could move up to the governorship.

In the 2018 election, we got a woman named Letitia James. By this time, all pretense that the Attorney General ought to be an impartial law enforcement officer had been long forgotten. James not only made no secret, but actually bragged and campaigned on her intention to misuse the powers of the office to go after political enemies, most particularly Donald Trump, who was President at the time. And, she promised, she would not just sue Trump in his capacity as President for allegedly exceeding his constitutional powers, but she would go after him personally in any way she could, to try to destroy him. The following quote is a summary from the Buffalo News on October 30, 2018, in the run-up to that election:

Democrat Letitia James promises much more than simply opposing President Trump should she win her Nov. 6 election for New York attorney general against Republican Keith Wofford. Indeed, she will continue current Attorney General Barbara Underwood’s litigation against Trump policies on immigration, civil rights, the environment and minorities. But she promises even more scrutiny of the president’s personal and corporate finances, his real estate holdings, whether he has dodged taxes, and more.

That was just under four years ago. In the intervening years, there have been public indications from time to time that some kind of big investigation was going on (for example, court filings involving Trump’s accounting firm Mazars), but never any charges. Meanwhile, there was a companion criminal investigation of Trump going on in the Manhattan DA’s office. (In New York, the AG has only certain limited criminal jurisdiction, and most criminal jurisdiction rests in the county DAs.). The Manhattan DA conducting that investigation, Cyrus Vance, Jr., retired at the end of 2021, and a new guy, Alvin Bragg, took over at the start of this year. Bragg promptly held a review of his office’s Trump criminal investigation, and decided to walk away from it. I covered that subject in a March 11 post here.

But Letitia James is running for re-election in November, less than two months away. She needs to get her name in the news. Does she have anything at all to show for her four years of effort pursuing Trump?

This morning James held a big press conference to announce the filing of a 214 page Complaint against Trump. A full copy of the Complaint can be found at this link (via NBC News).

Once again, I’ve wasted some valuable hours of my life, and here is my evaluation: What an embarrassment! After almost four years and a big team of full-time investigators just to chase this one white whale, could this really be all she has?

First, there are no criminal charges. This is purely a civil complaint. Admittedly the NY AG’s office has limited criminal jurisdiction, but it does have some important areas of criminal jurisdiction (notably a securities statute called the Martin Act). But none of that is at issue here.

Second, most of the subjects of the AG’s investigation that have been mentioned in the press over the years are not covered. One subject that has been repeatedly mentioned is alleged undervaluation of properties for purposes of real estate tax while giving much higher valuations for getting loans. There is no mention here of undervaluation of properties for purposes of real estate taxes. That ground never made any sense to begin with (real estate tax assessors do not rely on a property-owner’s valuation), but still has been repeatedly mentioned. There is also no mention of “dodging” other taxes (as suggested in the Buffalo News article above).

Instead, what this is almost entirely about is alleged over-valuation of properties when preparing unaudited personal financial statements as part of getting loans.

I’ve tried to read as much as I can of this, and maybe I’ve missed something, but I can’t find any allegation that any of the loans in question has ever been in default or not paid on time. Indeed, the Complaint concedes that many or even most of the loans in question have been fully paid off. I like to think that I have been around the block once or twice, but I have never heard of a situation of someone being accused of defrauding a bank in getting a loan, where the loan has either been fully paid and discharged, or is completely current on principal and interest. Has any reader ever heard of such a thing? As far as I know, such a claim is reserved exclusively for Trump. He must feel very privileged.

Lacking any defaults, there is no one claiming harm. Are there any damages here of any kind? None of the banks or other institutions that made the loans are plaintiffs in the case. If they don’t think they’ve been harmed, where is the possible harm?

Here’s the main theory of the case: Trump could have gotten non-recourse loans against his commercial properties, but in many cases decided to get recourse loans, requiring his personal guarantee, in order to qualify for a somewhat lower interest rate. He gave personal financial statements as part of the personal guarantees, and those personal financial statements contained inflated values for various properties other than the ones that may be the immediate subject of this particular loan.

OK, but how much equity was there? The Complaint doesn’t say. If there’s lots of equity to spare, then various overvaluations are just so much meaningless puffery, and likely would be immediately obvious to a reader with any sophistication. It could well be that even if the valuations were cut in half there would have been plenty of equity. Much of the text of the Complaint relates to properties like 40 Wall Street and Trump Tower in Manhattan, where a quick internet search can yield an independent view of the value of the property.

This being a civil case, don’t expect it to move fast. Some time after the election, Trump’s lawyers will file a motion to dismiss. That could take a year or two to resolve. It’s entirely possible that the lack of damages will doom much or even all of the case.

I have no doubt that Trump gave some ridiculously high values for some of his properties on his financial statements. My reaction is, so what? Particularly in the absence of any defaults after many years. Nothing about that is nearly as serious a matter as the ethical violation of New York’s chief law enforcement officer in misusing the office to select a target on the basis of politics without any reason to suspect particular wrongdoing. Such conduct should get the AG disqualified from running for office and even disbarred. But in the real world that we live in, she will almost certainly get re-elected in a few weeks.