Trump mounts strong defense in trial already lost
Byron York
TRUMP MOUNTS STRONG DEFENSE IN TRIAL ALREADY LOST. This week, former President Donald Trump has been presenting his defense in the New York civil lawsuit alleging Trump committed fraud by overvaluing his assets and net worth in order to deceive banks into loaning him millions of dollars. By filing the suit, New York Attorney General Letitia James appears determined to destroy the former president’s business empire. She might succeed.
James found a compliant judge in Arthur Engoron, who in late September issued a summary judgment finding Trump guilty of fraud on a massive scale. The nonjury trial going on today is just to decide how extensive the penalty against Trump should be. In the case of Trump, the verdict comes before the trial.
Now, however, in the penalty phase, Trump’s lawyers are getting to present some of the defenses they would have presented had Engoron not decided the case before trial. They have argued that there were no victims in this case. The banks were not deceived. They did their own financial research before making the loans. Trump did not default on any loan. The banks did not lose money. In fact, they made a lot of money, and the bankers were happy. So even if there were inflated numbers on Trump’s end, there were no victims, and given the prevalence of the practice in New York, if there were inflated values, the state should impose fines and move on. Instead, James seeks to impose what is sometimes referred to as a “corporate death penalty,” stripping Trump of the right to do business in New York forever.
Subscribe today to the Washington Examiner magazine that will keep you up to date with what’s going on in Washington. SUBSCRIBE NOW: Just $1.00 an issue!
This week, David Williams, a Deutsche Bank managing director who was involved in approving loans to the Trump Organization for several of its most prominent properties, testified as a defense witness. Williams said that before making the loans, Deutsche Bank did its own due diligence on Trump’s net worth and the values of his properties. When a Trump lawyer asked, “Is the bank capable of reaching its own judgment based on the evaluation it makes of the guarantor’s financial condition?” Williams answered, “Certainly, yes.”
Then Williams said, “As part of our due diligence, we subject a client’s asset value to adjustments. It’s part of our underwriting process. We apply it to every client regardless of what’s reported.” Trump’s lawyer asked: “Is a difference of opinion in asset values between the client and the bank a disqualifying factor to extend credit?” Williams answered, “No.” The lawyer asked why not. Williams answered, “It’s just a difference of opinion.”
And then this, from Bloomberg: “Deutsche Bank, which loaned hundreds of millions of dollars to Trump for properties in Miami, Chicago, and Washington, cut his stated net work in 2011 and 2012 from about $4.2 billion to $2.3 billion, according to internal bank credit memos. The same documents indicated the bank approved the loans anyway because it expected them to generate a profit based on Trump’s history of successful developments and other criteria.” Williams testified that a significant disagreement between the bank and the borrower over the borrower’s net worth was “atypical but not entirely unusual.”
Another Deutsche Bank managing director at the time, Rosemary Vrablic, testified that the bank’s revenues from its relationship with Trump went up and up in the early 2010s. “Her division’s revenue from Trump business shot up from about $13,000 in 2011 to a projected $6 million in 2013, according to a bank document,” the Associated Press reported. Deutsche Bank executives, per the Associated Press, referred to Trump as a “whale” of a client, one they enthusiastically pursued.
In 2014, also according to the Associated Press, Vrablic’s “direct boss went to lunch with Trump to thank him and ‘ask whether we can work on other opportunities with them,’ according to a document for that meeting.”
In short: Deutsche Bank did its own research for the loans. It made the loans. Trump paid the loans. Deutsche Bank made a big profit. Bank officials were happy and wanted to do more business with Trump. And yet, somehow, that is the basis for the New York attorney general’s effort to bring down Trump’s business empire.
Engoron is, as always, happy to go along. He listened to the testimony and said, “The mere fact that lenders were happy doesn’t mean the statute wasn’t violated.” Engoron has already pronounced Trump guilty, and he’s not going to back down from that. Trump has lost this case, regardless of what penalty is imposed. His only hope, and it is a significant one, is to win on appeal.
A few weeks ago, George Washington University law professor Jonathan Turley said that as far as he knows, a lawsuit like the one James filed against Trump is unprecedented. “I could find no case anywhere like this,” Turley said on Fox News. “A lot of people wouldn’t object if the attorney general was seeking some fine because there were inflated numbers. You know, inflated numbers in the real estate business in New York are a ubiquitous problem. And if you want to fine him, fine. But [James] is going for total annihilation. She is asking to take this iconic figure and effectively ban him from business in New York. And the question is why. The answer is because that’s what she promised to do: to seek his utter destruction if she can.”
Indeed, James won the 2018 Democratic primary for attorney general by promising to punish Trump more harshly than her competitors would. Now, she wants to be the governor of New York, and by pursuing Trump, she is keeping her earlier campaign promises. And how, exactly, did she make those promises? Here is a small sampling of some of the things James said in her effort to become the attorney general of New York:
This illegitimate president who sits in the White House … he’s not my president. He’s an illegitimate president. His days are numbered. His days are numbered. … We’ve got to be ready to mobilize, and we’ve got to get ready to agitate and irritate until victory is won or, more importantly, until Trump is defeated. … We will all rise up and resist this man … and ultimately, we’ll bring him down. … Illegitimate president. … I’m going to give you [Trump] the same level of respect that you gave President Obama, and that is absolutely no respect at all. … Donald Trump has got to go. Hey, hey! Ho, ho! Donald Trump has got to go. … The days of Trump are numbered.
“Ultimately, we’ll bring him down.” The New York lawsuit, in which James is seeking to decimate Trump’s businesses on behalf of banks that happily and profitably dealt with Trump, is James’s attempt to do just that.
For a deeper dive into many of the topics covered in the Daily Memo, please listen to my podcast, The Byron York Show — available on Radio America and the Ricochet Audio Network and everywhere else podcasts can be found.