When Kary Tur on MSNBC asked this question of legal analyst Lisa Rubin, the mere question caused outrage among some who thought the question was inappropriate. It is a legitimate question that deserves an answer.
The difficulty of addressing the question is that the legal issues involved in the case are not ones that we normally encounter. Further, the reason for the amount of the judgment may seem to be counterintuitive.
In a typical civil case that requests money damages, the focus is on the amount of loss suffered by an injured party. So, for example, if someone breached a contract with me, I would be entitled to receive what the wrongdoing cost me. This is not that kind of case. Instead, this case comes from a New York statute that evaluates the improper benefits to an individual who gained that benefit through fraud. Recovering that money is called “disgorgement.’ It is not necessary to show, for example, that a bank suffered due to nonpayment of a debt. It is sufficient to show that the conscious manipulation of valuations gave an individual better contract terms than if he had been honest with values.
Try this analogy. I am applying for a mortgage on my home. My credit score is 500. A bank would charge me 7% interest based on that credit rating. However, I have fraudulently convinced the bank that my credit score is 780, entitling me to an interest rate of 5%. During the course of the loan, I made all the payments on time; never defaulted. The financial result to me is that I saved thousands of dollars in interest and the bank, though making some money, did not get what they would have been entitled to had I been honest in my application. Furthermore, having gotten away with it in my home mortgage, I used the same fraud to get more favorable rates on a series of rental properties. Since there is no question that I saved a lot of money by my fraud, I have received an improper benefit. When the case of disgorgement comes to court, I am liable for my ill-gotten gains. In addition, since I am showing no remorse for doing this, the court imposes punitive damages, recognizing that unless I am penalized, I will continue that same fraudulent conduct.
During the course of a six-week bench trial before Justice Engeron (no jury trial is available under the statute), Engeron listened to and evaluated the credibility of numerous witnesses. He heard notable examples of fraudulently inflated property values. He learned that Trump’s New York apartment of 10,000 square feet was valued as though it was 30,000 square feet. He also found out that the Florida Mar-a-Lago property, though restricted by deed forever as a “social club,” was valued as though it was a personal residence.
Justice Engeron’s 93-page decision is fastidious in recounting the testimony of all the witnesses and his rationale for determining the witnesses’ credibility. His conclusion was that Trump and his family, business associates and companies engaged in pervasive misrepresentation of property values over a number of years. The Judgment amount calculated the benefit they received as a result of their fraud.
So was the damage amount “fair”? According to the rules set forth in the New York statute, it was certainly defensible, though the total amount can always be reduced on appeal.
I have two side comments.
One contrarian argument about the case is that the statute
had never been used before where there was no established loss to another party,
Hence, it was ”selective enforcement.” This is a garbage argument. Consider
that Al Capone’s conviction for tax evasion was the first time the tax laws
were used to convict a crime boss. Just because a statute is infrequently used
does not mean that it has any less value in a particular case.
Reluctantly, I also need to make brief mention of Trump’s legal representation in this case. Excusing for the moment Aline Habba’s disregard for courtroom decorum, she made some mistakes about admitting evidence that would make a first-year law student cower in embarrassment. Her actions will dramatically harm rather than help any attempted appeal.
