Why New York state is suing Trump instead of charging him with crimes

After a three-year investigation, New York Attorney General Letitia James has filed a civil lawsuit against Donald Trump, three of his children, and his real estate company, claiming they “have been guilty of numerous crimes for at least a decade.” fraud and misrepresentation”. . The lawsuit alleges that the Trumps have knowingly and consistently overestimated the value of at least 23 commercial properties in order to get lower interest rates and cheaper insurance. James wants the family and company to spit out $250 million, the amount they’ve supposedly saved by defrauding banks and insurers.

um okay? If Trump’s business practices were skewed, it’s appropriate for the proper authorities to hold him accountable. And there is widespread evidence that Trump has pushed the boundaries of legality in his long career as a showman and real estate developer. A 2018 New York Times exposé, aided by leaks of family documents, claimed that Trump participated in several “dubious tax schemes…including cases of outright fraud.” Former Trump attorney Michael Cohen has also accused Trump of criminal activity, including some crimes in which Cohen participated and for which he went to prison.

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And yet the New York AG’s suit seems… disappointing? The suspected victims in James’ suit are not customers Trump defrauded, contractors he reprimanded, or shareholders he lied to. The victims are banks and insurance companies that allegedly underpaid Trump on loans and insurance policies because Trump told them his properties were bigger and more valuable than they actually were.

The government usually does not sue on behalf of large corporations that have their own well-staffed legal departments. Financial companies rely to some extent on customers telling the truth. But they also insure their own insurance policies, with the explicit goal of making sure they don’t commit money based on false information. When ordinary people apply for a mortgage, the bank doesn’t write a blank check without asking questions. Instead, it conducts a thorough credit check, values ​​the property and assesses the loan based on the risk it believes it is taking.

It’s harder to do due diligence on a complex company like Trump, but that’s what investment banks and other big lenders do for a living. For example, James’ lawsuit alleges that Trump’s longtime lender, Deutsche Bank, has repeatedly given Trump favorable interest rates and other loose loan terms because of “the inappropriate, repeated and persistent use of fraudulent and misleading financial statements.” Terrible. But isn’t that Deutsche Bank’s problem? Shouldn’t the bank be the one to sue, rather than the New York AG? What damage has Deutsche suffered?

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‘There doesn’t have to be a loss’

James appears to be taking this approach as opposed to a criminal charge, as New York law allows the AG to seek damages caused by fraudulent business conduct as a form of consumer protection. The law does not require the AG to identify a victim or even demonstrate that anyone has suffered harm. Moreover, the burden of proof in civil cases is lower than in criminal cases.

“What makes this statute particularly powerful is that there doesn’t have to be a loss,” Will Thomas, a law professor at the University of Michigan’s Ross School of Business, told Yahoo Finance. “This statute has been used to splurge on profits made illegally. The government can be allowed to reclaim all those profits. The provable nature is lower, and you don’t have to prove intent or intent.”

A civil suit also prevents James from bumping into Trump’s corporate criminal case that the Manhattan District Attorney is prosecuting. The two agencies sometimes collaborate in criminal cases, such as the recent indictment of former Trump adviser Steve Bannon. With regard to Trump, however, they seem to be pursuing complementary approaches rather than overlapping ones.

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Trump, of course, claims that the AG’s lawsuit is a politically motivated “witch hunt,” his umbrella term for any investigation into crimes or abuses he may have committed. As Trump points out, James is an elected Democrat in one of the most anti-Trump blue states. But that doesn’t mean James is harassing Trump just because she hates him. Prosecutors and other officials have a duty to investigate possible wrongdoing if they are aware of it. Media exposure, accusations by former Trump associates and plenty of circumstantial evidence provide James with enough fodder for a lawsuit. Trump’s main company is based in New York and has its jurisdiction. James can make it plausible that she is acting on behalf of the New Yorkers who have chosen her.

Putting pressure on other prosecutors

James also appears to be using the pump for other possible criminal charges against Trump, by other agencies. She is candid about referring evidence of crimes obtained during the AG’s civil investigation to federal prosecutors and the Internal Revenue Service.

Do they really need the help? The Justice Department already has detailed information about Trump’s business operations, from the Cohen case and other events. Trump was eventually identified as “Individual 1” in documents related to Cohen’s 2018 guilty plea on charges of tax evasion, fraud and campaign finance violations. Individual 1 was complicit in some of the same crimes for which Cohen went to jail. In the 2019 Congressional testimony calling Trump “Individual 1,” Cohen further elaborated on the types of financial shenanigans James is now suing Trump for.

The IRS has been controlling Trump’s taxes for years. How could it not? Given the many public allegations of tax evasion – legal or illegal – the agency would be remiss not to investigate whether it is true that Trump is fooling the tax authorities.

Perhaps James finds it necessary to pressure other prosecutors to do their job. The Justice Department has reportedly dropped the investigation into campaign finance violations ordered by Trump Cohen. Manhattan District Attorney Alvin Bragg has scaled back his criminal investigation into Trump. Criminal cases against the company will begin in October, but they will not target Trump personally, even though a prominent prosecutor who has left the DA’s office has said there is ample evidence that Trump himself committed crimes.

Other Trump prosecutions seem to be moving quickly. In Georgia, Fulton County District Attorney Fani Willis appears to be on track to file a criminal charge for electoral fraud against Trump and others who are working with him to reverse the 2020 election results. The Justice Department has hinted at possible obstruction of justice charges related to the lightning strike to Trump’s property in Mar-a-Lago in August, when it recovered large amounts of classified documents that Trump was not allowed to have.

Allen Weisselberg, former finance director of The Trump Organization, has already pleaded guilty to more than a dozen felonies as part of the Manhattan DA’s investigation. Weisselberg will testify against Trump’s company — but not Trump himself — when that trial opens on October 24.

James could eventually settle the civil lawsuit against the Trumps, though she would likely insist that they agree to hard terms that would make it look like she won. If there is no settlement, the case will likely go before a jury. But the trial alone, and the evidence it has produced, could be a victory for prosecutors seeking to punish Trump for years of wrongdoing.

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