James’ suit is filled with seemingly damning evidence, outlining a far-reaching scheme to defraud lenders by grossly inflating the value of Trump’s assets. This is a fairly common fraud scheme. Fraud is when you lie to someone to get their money, and a common way to defraud lenders is to lie about the value of the assets used as collateral, or in this case, the assets of the person who personally guaranteed the loan, to make the loan less risky than it appeared to be. James alleges that Trump and his children did this approximately 200 times between 2011 and 2021, sometimes inflating property values by as much as ten times, to secure more generous loan and insurance coverage, as well as tax benefits.
When I was a federal prosecutor, I frequently prosecuted bank fraud that resembled what Trump and his company allegedly did. I even locked up a rich real estate mogul who defrauded his lender. Not an unusual fact pattern to see. What is impressive is the sheer size of the outline. Trump allegedly obtained $250 million through fraud over a 10-year period, and the various schemes he used to inflate the value of his holdings were extensive. James alleges that Trump exaggerated the square footage of his Trump Tower triplex apartment, claiming it was 30,000 square feet instead of its actual size of 11,000 square feet and therefore should be valued at $327 million instead of $80 million. . It’s a price, James pointed out, that no apartment in New York City has ever charged.
The attorney general’s lawsuit does not contain damning emails or text messages, the kind that prosecutors often rely on to prove a defendant’s intent. But that might not be necessary under the New York law James cited, which focuses on repeated acts of deception. (And since your own accounting firm Mazars USA has said it will not stand by the statements it has prepared for a decade.It’s going to be hard for Trump to argue that the valuations were correct.)
But perhaps the main reason James has such a winning hand is this: Trump dealt him the cards.
In early August, he invoked the Fifth Amendment some 440 times during his plea in this case. It was undoubtedly the right decision on his part because he faces criminal investigations in multiple jurisdictions, and his words, while apparently referring to matters unrelated to election interference, could be useful to prosecutors seeking to prove his capacity for deception. Prosecutors could also use his words to file criminal charges based on the alleged scheme James uncovered.
But taking the Fifth has serious consequences in this case. Unlike in a criminal case, in a civil proceeding like the suit brought by James, the jury is likely to be instructed to infer that when Trump took the Fifth, his response would have been adverse to him. Trump’s repeated insistence that James’ politically motivated lawsuit left him no choice will not withstand the effect of the jury inferring that Trump broke the law and does not have a good answer to the questions he was asked.
That essentially screws up Trump and his family on this one. It is no coincidence that James put in his lawsuit that when Trump was asked if he “had an ongoing arrangement from at least 2005 to the present with Mr. Weisselberg, Mr. McConney and others to prepare the Statement of Financial Condition in a manner that included false and misleading valuation statements, Mr. Trump invoked his Fifth Amendment privilege against self-incrimination and refused to respond.”
In a civil case like this, that’s the ball game. Trump, his son Eric and others have taken the Fifth hundreds of times and can expect James and his team to throw it in their faces to prove their case. All other evidence is just supporting corroboration. Testimony from Trump and his family, or lack thereof, is the centerpiece.
It’s never easy fighting your state attorney general when he really wants to go after you. But Trump is overextended here because he is waging war on multiple fronts. He frequently represents individuals and businesses facing criminal and civil liability in various forums. Fighting on multiple fronts is difficult and involves concessions.
If I were Trump’s attorney, I would have cracked this case in its infancy. He delayed and prolonged it, just as he delayed and prolonged multiple criminal investigations over the years. Trump might think it’s in his political interest to claim that James is part of the great “witch hunt” (he’s certainly raised funds from recent investigations), but he’ll likely pay a legal price if he tries to drag this out any longer. James has not yet agreed to a deal. He will eventually do it, and the price he extracts will be unbelievable.