Legal Scholar Sees More Bad News for Trump in New York Fraud Case

Ryan Morgan
By Ryan Morgan
September 29, 2023Donald Trump
Legal Scholar Sees More Bad News for Trump in New York Fraud Case
A view of Trump Tower in New York City on January 13, 2023. (Angela Weiss/AFP via Getty Images)

At least one conservative legal scholar expects a New York fraud case against former President Donald Trump to keep bringing bad news for the Trump Organization after a judge determined the 45th president had overvalued his real estate empire.

President Trump and the Trump Organization are facing a civil lawsuit, brought by New York Attorney General Letitia James, alleging the Trump Organization inflated the value of its assets, thereby gaining more favorable terms on bank loans and business insurance policies.

On Tuesday, New York Judge Arthur Engoron granted a summary judgment against the Trump Organization, supporting a key claim brought by Ms. James, that the Trump Organization is liable for up to $2.2 billion for defrauding lenders and investors. In addition to ruling in favor of Ms. James’s fraud claim, Judge Engoron ruled that the Trump Organization must be dissolved.

The rest of the case pertains to six claims brought by Ms. James, alleging conspiracy, the falsification of business records, and insurance fraud.

“I don’t think it’s going to go very well for the former president,” legal scholar John Malcolm told NTD News.

Mr. Malcom is the vice president of the Institute for Constitutional Government at the conservative Heritage Foundation.

One particularly challenging aspect of this case for President Trump is the fact that the six remaining causes of action will be decided in a bench trial. A bench trial is one in which both the prosecution and defense state their case before a judge, in this case Judge Engoron, who will then make a determination.

“So it’s not even going to be in front of a jury. And clearly, you have a judge who has indicated so far that he is not favorably disposed toward the former president,” Mr. Malcolm said.

In addition to the negative summary judgment for the Trump Organization, Mr. Malcolm noted Judge Engoron had also rejected arguments that the charges against the Trump Organization fall outside the statute of limitations.

“What the judge found was that you essentially had a continuing concealment and continuing course of events,” the Heritage Foundation legal scholar explained. “And there, you don’t look at the first thing that happened in that course of events to see whether it falls within the statute of limitations. You look at the last thing that happened in that course of events to determine when the statute starts to run. So he has already made that determination that the statute of limitations had not expired, and I assume he will stick with that ruling.”

Trump’s Legal Defense

The Trump Organization has repeatedly argued that its representations about the value of the various Trump properties had been fair all along because it provided sufficient disclaimers to financial institutions. The disclaimers described the methods the Trump Organization used to arrive at valuations for its properties and advised that financial institutions using different methods may come out with different numbers.

Judge Engoron ruled that the Trump Organization should have known its property valuations were inaccurate and the disclaimers they offered are not a sufficient excuse from their disclosure responsibilities.

“The former president said, you know, ‘Hey, I put in their statements that said basically, do your own due diligence, you can’t rely on this,'” Mr. Malcolm explained. “The judge rejected that saying, ‘You can’t have a disclaimer like that if you know, in fact, that the information you’re providing is not accurate.'”

The Trump Organization also argued that its valuations were fair because it simply represented an optimistic view of their properties and President Trump even argued that the valuations were fair because he was confident he could find people—such as “a buyer from Saudi Arabia”—who would buy the properties at the price his organization assessed. Judge Engoron similarly rejected this defense.

“The judge said, ‘Well, you know, what you might be able to do if you were to put something up for sale is not the same thing as what experts have said is the current value of that property,'” Mr. Malcolm said, summarizing the Judge Engoron’s ruling.

Case Unlikely to Derail 2024 Plans

The Heritage Foundation legal scholar assessed that the outcome of the New York case is unlikely to impact the former president’s bid to return to the White House in 2024.

A New York jury already found the Trump Organization guilty of tax fraud and falsifying business records in a December 2022 trial. A jury also found President Trump personally liable in May after he was sued for defamation for denying advice columnist E. Jean Carroll’s claims he sexually assaulted her at a department store at some point between 1995 and 1996.

Mr. Malcolm said these two prior judgments against President Trump and his business, as well as the 91 criminal counts he faces in four separate indictments, have not appeared to hamper his 2024 campaign efforts thus far.

“If anything, every time something like this happens, his poll numbers go up and his fundraising goes up,” Mr. Malcolm said. “So I don’t think that this will have an impact.”

Mr. Malcolm assessed that President Trump has been effective at arguing that the various legal challenges he faces are indicative of an entrenched political elite that is seeking to stop the former president’s political movement.

“It is a compelling message that many people have heard, and absorbed, and now assume to be true,” Mr. Malcolm said. “So that every time something bad happens to [President Trump] on a legal standpoint, he goes, you know, ‘See, this is more evidence of the fact that they’re out to get me. But they’re really not out to get me. They’re out to get you. They are just getting to you by going through me.'”

President Trump issued a lengthy statement on social media after Judge Engoron’s summary judgment, arguing that he is being targeted by a “DERANGED New York State Judge” who is “doing the bidding of a completely biased and corrupt prosecutor.”

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