The Shameful Lawfare of Letitia James and Arthur Engoron
This example of targeted civil prosecution ought to worry fair-minded people regardless of political persuasion.
It is difficult to overstate the overwhelming revulsion I feel toward New York Attorney General Letitia James, a progressive Democrat who sought to use the power of the state to target Donald Trump, smash his business, and personally embarrass him. Not because I’m some rabid Trump fan, but because of the grave harm James is doing to the country and the terrible precedent she’s establishing by engaging in blatant lawfare.
This porcine ogre campaigned for office on the Lavrentiy Beria platform, promising to find Trump guilty of something, anything—essentially choosing a target, then vowing to use the state’s law-enforcement apparatus against him. After her election, James literally said, “We will use every area of the law to investigate President Trump and his business transactions and that of his family as well.” She has operated as if treating the famous speech by then-attorney general and future Supreme Court Justice Robert Jackson not as a warning, but a how-to guide. It was he who said that “the most dangerous power of the prosecutor” is the ability to “pick people that he thinks he should get, rather than pick cases that need to be prosecuted.” Jackson explained that, given the variety of laws on the books, “A prosecutor stands a fair chance of finding at least a technical violation of some act on the part of almost anyone.”
There was a time not too long ago when a “show me the man and I’ll show you the crime” campaign would have been disqualifying for someone seeking a state-attorney-general post; but in today’s New York, where a political system masquerades as the judicial process, James won by nearly 30 points (and was reelected by nearly ten points after suing Trump, despite an unexpectedly tough election year for Democrats).
Together with elected Democratic judge Arthur Engoron, James concocted a scheme masterminded by Trump in which he supposedly defrauded banks out of $168 million in interest payments . . . and the banks just forgot to complain about it.
The entire trial was political theater, as Engoron ruled that Trump was guilty before it even started.1 This pretrial ruling pronounced that Trump is civilly liable for fraud because he inflated the value of his assets in statements of financial condition (SFC), which are used in various financial transactions (particularly bank loans and insurance contracts).2 In this, the judge endorsed James’s invocation of what former federal prosecutor Andrew McCarthy calls a “monstrous” New York statute—Executive Law §63(12). The power of this sweeping statute (which is meant to target consumer fraud) derives from the fact that it does not require the state to prove that the defendant had fraudulent intent, let alone defrauded anyone. All the prosecutor has to show is that a fraudulent act was committed while doing business in New York. No harm is required.3
That’s what makes this case so ridiculous, and so glaringly hyper-politicized: There are no victims. And Executive Law §63(12) has never before been used when no harm has been done.
But an Associated Press analysis of nearly 70 years of similar cases showed Trump’s case stands apart: It’s the only big business found that was threatened with a shutdown without a showing of obvious victims and major losses. — AP’s Bernard Condon
Is it not incredibly revealing that the state has never before sued under §63(12) on a theory of overvalued assets (which is hardly unusual behavior) where no counterparty claims to have been defrauded, and the first ever such case just happens to be this one, brought by an elected Democratic AG whose oft-stated antipathy toward Trump was a key feature of her election campaign?
Let’s say that Trump did overstate the value of his assets when he sought out the loans in question. But all of the loans secured by the allegedly fraudulent documents were paid back on time; none of Trump’s business partners lost money lending to him or claimed to have been deceived by his erroneous financial statements. Moreover, no witness during the trial said the former president’s alleged misrepresentations changed loan terms or prices, and there was no evidence that he profited from his alleged deceptions. The New York Times reported that the bankers even testified “they were thrilled to have him as a client.”
In fact, Judge Engoron himself found that “The record is devoid of any evidence of default, breach, late payment, or any complaint of harm…” Nevertheless, he remained so sensitive about the “no victims” hole in the state’s fraud case that in his pretrial ruling, he fined Trump’s lawyers for repeatedly bringing up this “completely irrelevant” point.
Knowing that she was bringing an unprecedented case in which no counterparty claimed to have been harmed, Letitia James was forced to come up with the theory that Trump’s alleged “fraud” (which Engoron has decreed is proven fraud) caused stratospheric losses for financial institutions—losses that they just failed to notice. Accordingly, she hired “banking expert” Michiel McCarty to testify that banks lost a staggering $168 million because of Trump’s asset inflation. Helped along by Engoron, McCarty claimed that Trump induced banks to charge him lower interest rates than would otherwise have applied by overvaluing such properties as 40 Wall Street in Manhattan, ultimately cheating the banks out of millions in payments.
There are obviously some glaring flaws in the James–Engoron theory, as Andrew McCarthy noted in November:
For starters, if there were proof that Trump had defrauded banks to the tune of $168 million, do you really think that the federal prosecutors who originally investigated the Trump organization would have passed on such a huge criminal case? No. The famously aggressive feds in the Southern District of New York would have jumped on it. I mean, think about it: Even the Manhattan District Attorney’s Office, which twice litigated all the way to the Supreme Court to get Trump’s financial records, and which has brought an (arguably) even more absurd indictment over the $130,000 in hush-money Trump paid to a porn star, deemed this case too much of a stretch.
Secondly, such proof is lacking because Trump’s business counterparties were sophisticated financial actors involved with the kind of high-end transactions that require entire departments of skilled, experienced appraisers. They dealt with him based on their own due diligence and knowing full well his penchant for exaggeration. Not only that, but Trump’s own statements of financial condition literally contained a disclaimer that they should not be relied upon.4
Third, there is zero evidence — and Michiel McCarty’s opinion is obviously not evidence — that if Trump had lowered his valuations, then the banks would have charged a higher interest rate. No state law holds that if an asset is valued at X amount, a bank must charge a set interest rate. The banks gave Trump loans or coverage because they surmised that doing so would be profitable (which it was), and because he was a good customer with a history of paying up.5
Fourth, banks are in the loan business to turn a profit. They’re subject to heavy regulation and have shareholders to answer to. It stands to reason that if the banks in question had been scammed out of $168 million, there would have been some lawsuits.
And yet despite all this, Engoron levied a $355 million fine on Trump, which has since increased to more than $464 million due to interest. Letitia James — the elected Democratic DA who campaigned for office, Lavrentiy Beria-style, promising to weaponize the law against Trump, and who has proven herself to be a vindictive, politically motivated prosecutor willing to stretch the law to nail one specific person she and all her supporters passionately hate — got an elected Democratic judge to impose an historically unprecedented fine (in a state that routinely refuses to prosecute serious crimes) on the front-running presidential candidate for business activities that resulted in no victim. It was a legal proceeding in name only, one with a foregone conclusion that degraded into a partisan persecution by the second day of the trial.
The shockingly extravagant judgment against Trump isn’t for damages — since, again, this was a victimless crime with no material effect that anyone could discern — but supposedly to “disgorge” his “ill-gotten gains.” This remedy is “like using a Hellfire missile to annihilate a shoplifter”; it’s akin to “the corporate death penalty for a jay-walking infraction.” And it is a violation of a fundamental tenet of Western law: The punishment must fit the crime—a principle reflected in the Eighth Amendment’s prohibitions on excessive fines and punishments that are cruel and unusual.
Need I even point out that Democrats have decided to sacrifice higher-order values in order to engage in a blatantly political selective prosecution and impose a punishment with no connection to the underlying offense but with ruinous personal consequences? Need I even underscore that there’s no meaningful connection between Trump’s misrepresentations and the supposed ill-gotten gains behind the exorbitant fine, and that this is punishment for its own sake? Does anyone really believe that this case would have been brought against anyone with a last name other than Trump, or brought if Donald Trump hadn’t become president?
Defendants are required to post bonds to appeal verdicts, but Trump’s lawyers wrote Monday in a court filing that they’ve been unable to obtain a bond to guarantee the $464 million judgment because most of his assets are illiquid.
Letitia James is clearly enjoying all of this. She likes to taunt Trump by posting the ever-growing judgement number on X—more than $100,000 in interest is tacked on every day. And of course there’s been nothing but glee among the TDS-afflicted, no limit to the unbridled mirth exhibited by talkings heads on MSNBC and CNN, no shortage of thinly veiled celebratory pieces penned by New York Times and Washington Post scribes—all of these fools positively giddy about what can only be described as a rejection of the Anglo-American legal tradition in favor of law as blood lust, the long-lasting collateral damage to the country be damned.
Even the Biden administration can’t help itself. Last week at the Gridiron Dinner in D.C. — a fancy white-tie gathering of major media figures and the top politicians they cover — Biden made the following joke: “Our big plan to cancel student debt doesn’t apply to everyone. Just yesterday, a defeated-looking man came up to me and said, ‘I’m being crushed by debt. I’m completely wiped out.’ And I said, ‘Sorry, Donald, I can’t help you.’”
Letitia James is now planning on seizing Trump’s assets after effectively denying him the ability to appeal the grossly inflated civil-fraud judgment against him. As Rich Lowry puts it, “You don’t have to be Ayn Rand to be distressed at the prospect of someone who — whatever have been his sharp practices and exaggerations along the way — has built what are now iconic pieces of the New York City landscape watching the state come and take them away on the flimsiest of grounds.”
I, for one, am in agreement with anti-Trump pollster and consultant Frank Luntz, who said the following during a panel discussion on CNN Thursday: “I want you to remember this moment, and don’t forget it. If the New York Attorney General starts to take his homes away, starts to seize his assets, it’s all gonna be on camera… you’re going to create the greatest victimhood of 2024, and you’re going to elect Donald Trump.”
Before the lawsuit was filed, when Trump protested that James was singling him out for investigation — James having quite literally bragged that she was singling him out for investigation — Engoron pooh-poohed the complaint, observing that Trump was “just a bad guy she should go after.” Is it any wonder why Trump chose to dispense with the pretense that he was participating in a solemn judicial proceeding rather than a show trial orchestrated by his political enemies?
The trial that followed Engoron’s ruling was to determine what the damages for Trump’s infraction should be. In other words, Engoron was simply deciding how much to let (or, better, help) Letitia James run up the score.
As The Wall Street Journal’s Philip Hamburger wrote last year, “Common-law fraud doesn’t punish mere inaccuracy. It requires the plaintiff to prove the defendant knowingly made a false statement of material fact with intent to deceive, and that the victim was injured by his reliance on the false statement.” By contrast, Executive Law §63(12) defines fraud to include as little as a “false pretense” in the course of business. Typically, the degree of culpability required for fraud is intent to deceive. But §63(12) requires neither intent, recklessness, or negligence.
Every time that Trump’s lawyers stated all this, Engoron would shut them down, inveighing that he had already ruled Trump committed fraud.
Trump’s lawyers tried to point all this out as well, but Engoron peremptorily declared that he had already decided Trump’s loans were “ill-gotten,” and that McCarty was just “deciding the number.”
I am by no means a fan of Trump, but we should all be grateful for what his ascendance has taught us about the supposed principles and ethics of our sanctimonious liberal elite class who imagine themselves as the embodiment of "moral clarity":
Remember for decades they were champions of free thought, speech and expression until they learned that these things could threaten their power and their places at the top of the social pyramid, at which point they began fellating the Deep State to keep us safe from "disinformation" etc;
Remember for decades the millions of preachy movies and plays about the Red Scare and the evil Puritans who would dare hound someone from society for their political opinions ("UnAmerican!"), until of course they had the chance to do the same to their political opponents, who now must take "Diversity" oaths and mouth other progressive shibboleths as the price of employment;
Remember for decades the millions of movies and plays and speeches about MLK and his vision of a colorblind America, which went from Promised Land to Jim Crow 2.0 and had to be jettisoned because it doesn't allow our betters to weaponize race to punish their opponents and reward their sacred cows (whose votes they can't win without);
and then of course remember all the hysterical warnings they made about Trump even before he won (and even after he already served four years): he will weaponize the government to punish his enemies, he will ignore the rule of law and abuse his power, he will use the power of the state to silence dissent and shower cash and benefits on his cronies—all of which have come true, except that it's the Dems and their backers who've fulfilled their own prophecies.
And I think we can all sense how this movie will end: the Dems and the MSM, their puppetmasters in the ownership class, and their Social Justice foot soldiers will destroy the village called Democracy in order to save it.
We now know that Biden et al have badly corrupted our once widely admired legal system.
In November we’ll find out how badly they’ve corrupted our electoral system.