Trump’s Civil Fraud Trial

This week, New York Judge Arthur Engoron is expected to announce his decision on damages to be paid by Donald Trump for the civil financial fraud case. The New York attorney general, who brought the case against Trump, has asked that Trump and his companies be ordered to pay $370 million for allegedly misstating the values of his business assets.

For reporters looking for experts to help explain the issues when the ruling comes out, please consider Syracuse University Professor of Law Gregory Germain. He is an expert on taxation, commercial law, bankruptcy and corporate law.

To give you a sense of his point of view and his expertise, here is what he has said in the past about the hearing and the laws involved.

• “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,” said Germain.
• “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,” said Germain.
• “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,” said Germain.
• “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,” said Germain.