The lawsuit exercise smacks of the political hackery for which James is now notorious.
The lawsuit exercise smacks of the political hackery for which James is now notorious.
N ew York State attorney general Letitia James has filed a massive civil lawsuit against former president Donald Trump, alleging a sprawling, decade-long fraud scheme to obtain lucrative business-accounting benefits by inflating the value of his assets and his net worth. It’s a mountain the ambitious James has made of a molehill. Like much of her work, it results in a big political splash when the allegations get rolled out, but whether it will come to much in the way of proof or consequence is open to question.
Also named as defendants in the 220-page complaint are the former president’s three adult children — Don Jr., Ivanka, and Eric, all of whom are top Trump organization executives — as well as the Trump organization’s two top financial officers, the Trump organization, and various of its related business components.
The lawsuit seeks $250 million in damages and a five-year suspension of the defendants’ ability to conduct business in New York. Attorney General James has also made formal referrals to federal law-enforcement authorities — specifically, to the Justice Department on suspicion of bank and insurance fraud, and to the Internal Revenue Service on suspicion of tax fraud.
On that score, as I have previously related, the Trump investigation began as a federal probe in the Southern District of New York, which took a guilty plea from former Trump lawyer (and self-described Trump “fixer”) Michael Cohen, mainly related to hush-money payoffs to two women who claim to have had sexual trysts with Trump a decade before he became president. Though the dodgy Cohen was anxious for a cooperation agreement, the SDNY declined to execute one with him. He was sentenced in late 2018 to three years’ imprisonment, and the federal investigation of Trump was closed. It is highly unlikely that the SDNY would have walked away if it had believed a criminal prosecution of Trump was promising, or that a strong case could be built based on Cohen’s testimony. (Note that James lauded Cohen in her remarks announcing the civil lawsuit, and Cohen responded with a cloying statement about “my journey to the truth . . . filled with sadness, pain and anger.”)
James’s office has collaborated on the three-year investigation with the Manhattan District Attorney’s Office. In August, DA Alvin Bragg announced the guilty plea of Allen Weisselberg, the Trump organization’s chief financial officer, to 15 relatively minor tax felonies. Weisselberg is named as a defendant in James’s complaint, and he figures prominently in allegations that Trump personally directed the inflation of his net worth and his assets.
But let’s keep things in perspective. While the state prosecutors trumpeted the guilty plea, they were muted about its seriousness: Weisselberg is going to be sentenced to all of three months’ incarceration. Sure, he’ll pay $2 million in taxes, penalties, and interest, but what would you expect when taxes have been evaded for a decade or three? And that amount is considerably less than what Bragg and, especially, his predecessor Cy Vance Jr. invested in the Ahab’s quest of making a case against the former president before coming up with bupkis. Again, Weisselberg is expected to testify next month in Bragg’s prosecution of the Trump organization. But it’s just the corporate version of the Weisselberg case — penny ante.
With that as background, James’s civil lawsuit is best understood as “the fraud crime to end all fraud crimes, which partisan Democratic prosecutors wish they could prove . . . but can’t.” James’s bells-and-whistles press conference notwithstanding, what made the case unattractive to criminal prosecutors is blatant. For all the state AG’s hype about a “staggering” number of allegedly false representations by Trump (over 200, she says, between 2011 and 2021), the case lacks what truly massive fraud cases are best known for: a victim — indeed, at these numbers, you’d expect an array of victims.
To the contrary, James identifies none. This is no Bernie Madoff case. No one was financially ruined (or even appreciably damaged) due to Trump’s machinations. Trump dealt with a wide run of highly sophisticated financial actors — banks, real-estate corporations, insurance conglomerates, accounting firms, etc. They knew exactly who he was, what his reputation has been for a half-century, and how his accountants tended to avoid vouching for his number-crunching. At bottom, Trump is accused of behavior that is hardly unknown in corporate America and in companies worldwide: pushing the bounds of reporting mandates and other required financial representations to the breaking point. These disclosures, reflective of the abstruse activities for which they account, feature cavernous gray areas. Values can vary widely based on financial estimates and business judgments, all in order to minimize tax liability while maximizing insurance coverage and borrowing leverage.
This is not to excuse Trump, who is alleged to have engaged in some major bookkeeping whoppers — such as (1) inflating the size of his Trump Tower residence almost threefold (it’s about 11,000 square feet; he said it was 30,000) in order to value it an absurd $327 million — by comparison, James says the record-high sale price of a Trump Tower apartment is $16.5 million; (2) claiming the value of his Mar-a-Lago is about ten times the AG’s (likely low-ball) estimate of $75 million; (3) claiming the value of rent-controlled Trump Park Avenue apartments as if they were unrestricted — thus inflating to $50 million assets the AG says are worth just $750,000; and, in a particularly unsavory move, (4) granting conservation easements on Trump properties whose values were inflated and then writing off the exaggerated value of the easements as charitable deductions.
Even assuming, though, that hyperbole is etched into Trump’s DNA, it is highly unlikely that many businesses could endure scores of federal and state prosecutors crawling through their books for three years and come out unscathed.
The lawsuit exercise smacks of the political hackery for which James — who campaigned vowing to use the power of her office to nail Trump — is now notorious. When she had gubernatorial ambitions, she conducted an extensive investigation of the then-incumbent, Andrew Cuomo, and then rationalized dumping a sensational report into the public domain. Is Cuomo a swine? Yes, many who’ve dealt with him, especially women, so attest; and his cover-up of the carnage wrought by his ill-fated order that nursing homes take Covid-infected patients is infamous. But that said, James didn’t file a single lawsuit against Cuomo, nor has a district attorney’s office prosecuted a criminal case against him based on what she portrayed as her bulletproof findings. It was the political AG’s version of a hit-and-run.
The Trump case seems no different. It is going to take years for the case to work its way through the court system, by which time James will be on to the next rung of the ladder, braying that she took out the Democrats’ arch political nemesis right after torching Cuomo, the political poster boy of #MeToo-lite.
What we should understand about James’s magnum opus is that it never gets better for her than it was today — a victory lap before the Trump-hostile press, at a point where all we have are allegations, nothing has been proved, and not a single accusation has yet been picked apart by defense lawyers. Even with that, there are no arrests, no victims, and no apparent prospects that the prosecutors she preened about referring Trump to will have any interest in her case, having already turned their noses up at it.
Trump has a great deal to worry about in the way of potential criminal exposure. The Justice Department’s investigations — of the classified documents stashed at Mar-a-Lago, of potential obstruction of that probe, of a scheme to overturn the 2020 presidential election, and of the obstruction of Congress toward that end — carry significant risk of prosecution on multiple, weighty felony charges. The Georgia criminal investigation of Trump’s interference in the state’s 2020 presidential election, which is being conducted by Fani Willis, another sharp-elbowed Democratic prosecutor in Fulton County, could also put the former president in real jeopardy.
Compared to those criminal inquiries, Tish James’s gambit is a nuisance. It will take a long time. It will be very expensive to litigate. I imagine that Trump and his children may eventually see the expedience in pulling a Weisselberg — admitting comparatively minor wrongdoing that partisan Democratic state officials will exaggerate into the crime of the century, the same way Trump portrayed his wealth as if it were the fortune of Croesus. But Trump’s real problem right now is the appointed attorney general of the United States, not the political attorney general of the Empire State.