The Stalinist New York Attorney General Scores A Big Win Against Trump (For Now)

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Josef Stalin set the example for the world as the most ruthless practitioner of the art of using a thoroughly corrupt and subservient “justice system” to eliminate all political opposition. Many, many others have since followed Stalin’s lead. Current notable examples include the recent murder of Alexei Navalny in prison in Russia; Venezuelan opposition leader Juan Guaido, who fled that country in late 2023 after his arrest was threatened by the Maduro regime; and Pakistan’s former Prime Minister and current opposition leader Imran Khan, convicted in January 2024 of “disclosing a state secret” and sentenced to 10 years in jail. Funny how the countries that engage in such practices virtually always have failed economies as well.

The United States has been remarkably free of such practices during its history. But we have seen a sudden complete reversal of that commendable history with the efforts of multiple political actors and prosecutors to use the courts to take down former President Trump. Readers here are likely familiar with the long list of such efforts, from the two federal Jack Smith criminal prosecutions, to the Fani Willis criminal prosecution in Georgia, to the Alvin Bragg criminal prosecution in Manhattan (supposedly for incorrectly recording the blackmail payment to Stormy Daniels in financial statements), to the many efforts to remove Trump from primary and general election ballots.

Of all the multitudinous “get Trump” efforts, the most proudly and nakedly Stalinist is the civil fraud case brought by New York Attorney General Letitia James. What distinguishes the James crusade from all the others, as political as those might be, is that the others all have had at least a pretext of investigating some known or suspected wrongdoing. With James, by contrast, from the start it has always been about finding some way, any way, to take out the man. James initially ran for AG in 2018 on a campaign explicitly promising to get Trump, who was President of the United States at the time. My first post covering James’s vendetta against Trump was on December 13, 2018, shortly after her first election victory and before she took office. That post quoted at length from an interview James had just given to NBC News. In her interview, James emphasized that her focus in office would be on somehow getting Trump, and she essentially conceded that she had no basis at the outset to believe that wrongdoing had occurred. A short excerpt:

"We will use every area of the law to investigate President Trump and his business transactions and that of his family as well," James, a Democrat, told NBC News in her first extensive interview since she was elected last month. James outlined some of the probes she intends to pursue with regard to the president, his businesses and his family members. They include: - Any potential illegalities involving Trump's real estate holdings in New York.

In other words, when the investigation began, James had no inkling of what, if any, wrongs might have been committed “involving Trump’s real estate holdings,” and no complaining party asking for redress.

I had a second post about the James jihad against Trump on September 21, 2022 — shortly before James was re-elected to a second four year term in November of that year. The September 2022 post was titled “A New Low For New York Attorney General Letitia James.” The occasion for the post was that James, now nearing the end of her first term, had finally announced the big Complaint against Trump that everyone had been waiting for. The Complaint listed some ten attorneys in the AG’s office as participating — a truly extraordinary investigatory team. My comments in that post have stood the test of time, so rather than re-writing them, I will quote a few of the more notable items:

  • First, there are no criminal charges.

  • [T]his is almost entirely about . . . alleged over-valuation of properties when preparing unaudited personal financial statements as part of getting loans.

  • 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 proof at trial was that all of the loans were always paid on time.)

  • [T]here is no one claiming harm.

  • [H]ow 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.

  • 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.

Well, James drew for the case a judge worthy of a Stalin show trial named Arthur Engoron. After previously granting summary judgment to the AG on one count, Engoron conducted a trial from October through January to determine liability on the other counts, and also to determine damages, if any. Justice Engoron issued his 92-page decision on Friday, February 16. Readers likely know that Engoron found the defendants liable on all seven counts (not all defendants on all counts). As monetary relief (technically he calls it “disgorgement” rather than “damages”) the judge ordered a total of some $355 million payable by Trump himself, plus interest from various dates, which could add tens of millions more.

Here are a few legal notes:

  • This case is brought under something called Executive Law Section 63(12). That statute gives authority to the Attorney General to enjoin someone who is engaging in “repeated fraudulent or illegal acts” or “persistent fraud or illegality.”

  • The judge notes — correctly — that the statute does not require three elements that are usually part of actionable fraud, namely intent, reliance, and damages. However, the judge skips over the problem that the statute does not do away with the element of “materiality.” Materiality is a critical element of a claim of fraud, and proof of it was completely missing here.

  • The State Comptroller at the time the statute was passed in 1956 was a guy name Arthur Levitt. Engoron quotes Levitt as saying at the time “Why not grant the Attorney General authority to enjoin anyone from continuing in a business activity if such person has been guilty of frequent fraudulent dealings?” Well, Mr. Levitt, now you know your answer. To remove the ancient common law requirements of intent and reliance from proof of fraud is to give a politicized Attorney General way too much power to attack political adversaries.

  • Several bankers from Trump’s lender, Deutschebank, testified that they did their own valuations of Trump’s properties instead of using the valuations provided by the borrower. That testimony completely undermines any finding of materiality.

  • The monetary relief is characterized as “disgorgement.” The idea is that Trump paid less interest than he would have paid if he had honestly valued the properties, and therefore he should have to give up that ill-gotten gain. But where does the “disgorgement” go? The answer is that Engoron orders the money to go to the “plaintiff,” or in other words, the AG’s office. (Does it even go to the state general fund? Good question.).

Trump at least theoretically gets two levels of appeal from here — first to the Appellate Division, First Department; and then to the state’s highest court, the Court of Appeals (which only takes cases by its own discretion, like the U.S. Supreme Court). Unlike the federal courts, the Appellate Division in New York has the statutory authority to review findings of fact. Likely before the appeals proceed there will be a battle as to whether Trump is entitled to have enforcement of the judgment stayed pending the appeals.

The Appellate Division, First Department has long had a reputation as a non-politicized court. I do not have any confidence that that reputation remains deserved today, and particularly in this case. Should it so choose, the Appellate Division has ample authority to reverse or drastically reduce the judgment, the most obvious grounds being lack of materiality and lack of damages.

All business leaders in New York, including those who hate Trump, should rightly be concerned about what has happened here. If a Stalinist Attorney General and one judge can do this to Donald Trump, they can do it to anyone they want. Jamie Dimon, David Solomon — this means you. Trump also thought he had the politicians bought off with political contributions.

The New York legal establishment has also shamed itself in this matter. Where are the lions of the bar calling out Letitia James for her conduct? I can’t find that. A few days ago, somebody finally brought an ethics complaint against James for the obvious conflict of campaigning to “get” a particular individual and then remaining involved in the subsequent investigation and trial. The complainant is Congresswoman Elise Stefanik, a known Trump ally.

Every day New York becomes more known for descending to third-world country status.