Maxwell alumna Phaedra Stewart ’91 finds it difficult to look at the world without seeing opportunities to connect with people, raise their spirits and empower them to make their lives better. A self-described serial entrepreneur (some might say a serial…
Law professor available to discuss ruling that Trump committed fraud for business properties
Reporters looking for a legal expert to help explain the issues facing the Trump businesses after a judge ruled that former President Donald Trump committed fraud by inflating the value of his assets, please see comments below from legal professor Gregory Germain
Germain is a law professor at Syracuse University College of Law and director of the school’s Bankruptcy Clinic. His research and teaching focus on taxation, commercial law, bankruptcy and corporate law.
Professor Germain is available to speak to reporters about the legal issues happening within this case. Please see his comments for a sense of his POV and expertise. Please contact Ellen James Mbuqe, firstname.lastname@example.org, to schedule an interview.
- “A New York judge ruled on Tuesday that Donald J. Trump persistently committed fraud by inflating the value of his assets, and stripped the former president of control over some of his signature New York properties. The latest ruling by Judge Arthur Engoron in the New York Attorney General’s case against the Donald Trump organization makes for great political theater, but will not do much to change the minds of his supporters or opponents, or to define the proper scope of the law at issue in the case.
- “Trump supporters see this case as a political witch hunt brought by a partisan democratic attorney general against the former Republican president for doing what real estate promotors have always done – exaggerating the value of their properties in unaudited financial statements that are based on opinion rather than verifiable, audited, generally accepted accounting principles. On the other side, Trump’s opponents can tout the brazenness with which he lied about the size and value of his properties, which is amply supported by evidence identified in the Court’s opinion.
- “But behind the political theater is a genuine legal question about the proper interpretation of the extraordinarily broad statute at issue in the case: New York Executive Law Section 63(12). This statute was enacted in 1956, and was designed primarily to protect consumers and investors. But It is being used here for financial statements given to sophisticated lenders and insurance companies. And, frankly, it is difficult to imagine any sophisticated lender or insurance company relying on a real estate promotors’ unverified statements of value, let alone statements from a well-known blusterer like Donald Trump.
- “The statute gives the Attorney General broad power to prohibit people (which includes entities) from committing fraud. The definition of fraud in the statute is similar to the definition in the securities fraud statutes – ‘any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual provisions.’ On its face, the statute does not require proof that someone relied to their detriment on the false statements. But courts traditionally have required a showing of reliance before punishing false statements in securities fraud statutes that use very similar language. Normally, a private lie is not actionable if no one believed or relied on it.
- “The question that higher courts will need to address is whether the Attorney General can dissolve and liquidate a company for expressing false valuation opinions to sophisticated lenders and insurers who may not have believed or relied upon the opinions. While the Attorney General may not need to prove reliance to stop companies from issuing false statements to the public in consumer or securities offerings, the statute is being used here to punish a private fraud on sophisticated parties without showing the essential element of reliance and harm.
- “At trial, the Attorney General will be seeking an order requiring the Trump organization to disgorge any enrichment they received by using these false statements. It is not clear how the Attorney General will quantify the gains attributable to the false statements when they are not contending that the lenders and insurance companies relied on the statements in entering into transactions with the Trump organization.”