The How and Why of New York’s fraud case against Donald Trump

The long-expected civil fraud case against Donald Trump and others was finally filed this week. It is 220 pages of allegations against 16 defendants, covering 11 years of alleged misdeeds, 20 different properties, and 16 different varieties of fraud. To say the complaint is comprehensive is an understatement. 

It is not my purpose here to get into whether or not the case has merit, though there is certainly enough to survive a motion to dismiss. Instead, it makes sense to step back and answer some frequently (and not so frequently) asked questions. 

Why file a civil case rather than a criminal one? There are a number of reasons. First, civil cases are easier to prove. You only need to prevail by a preponderance of the evidence rather than showing guilt beyond a reasonable doubt. Second, a defendant has no fifth amendment rights in a civil case. You may recall that when Trump was subpoenaed to testify, he refused to answer more than 400 times. That refusal may be used by a jury to infer culpability. Third, in a civil case you may get a money judgment. Here, we are looking at the possibility of $250 million. Fourth, in a civil case you can get more than just money. One of the results of this case could prohibit Trump from doing business in the State of New York. Fifth, you can sue someone without stating he is a criminal, something that defendants often decry to show that they are being unjustly prosecuted. Sixth, a state civil case cannot be dismissed with a pardon. Seventh, there is still the possibility that Trump and his family may face criminal charges. However, those cases should be filed by a different party, such as the IRS. 

Why file the case now for conduct going back to 2011? The timing seems a bit suspect. Blame Trump for this one. For many years he has used every possible legal maneuver to keep relevant information from the attorney general, including tax and accounting records. It was only last month that the attorney general was finally able to obtain records from Mazars, one of Trump’s accounting firms. This was the missing piece of the puzzle. 

Why are there so many defendants besides Donald Trump? The answer to this is finger pointing. One common defense to fraud is that “somebody else did it” and that the complaint should be dismissed for that reason. The complaint names all of the major parties who could be that “somebody else.” A second reason to name multiple defendants is that they may have different levels of involvement or defenses to the actions. In many cases, defendants within the same lawsuit may throw others under the bus in order to escape personal liability. 

Why does the alleged fraud cover 11 years? Proving that conduct occurred over multiple years eliminates the defense that this was an inadvertent, one-time “mistake.” 

Why does the alleged fraud include 20 different properties owned by Trump or his organizations? Similar to the multi-year rationale, the attorney general can show that fraud was pervasive and took many forms. 

Why didn’t the attorney general sue Trump for other wrongdoing? First, the fraud complaint is complicated enough without adding in other allegations. Second, lawyers try to not add weak allegations when they already have a strong one. Third, confining the allegations to fraud eliminates the defense that the attorney general is “piling on.” Furthermore, there is no reason why a separate lawsuit covering other matters could not be brought later on. 

If this case goes to trial, when will that happen? Years from now. 

Then what will the impact of the lawsuit be between now and trial? The lawsuit provides sunlight. Much of Trump’s traditional answer to prospective charges is that they are politically motivated or a “witch hunt.” Here, the attorney general has provided chapter and verse of wrongdoing. In addition, prospective lenders are now on actual notice that the Trumps may have engaged in questionable business practices. Lenders tend to be reluctant to provide financing to those with a history of fraud.

The complaint, as lengthy as it is, is only required to show that bare bones of the fraudulent conduct. Much greater and potentially damaging detail will come out as the lawsuit progresses. By the same token, any defenses will also come to light.