New York Takes Control Of Trump Organization.

Okay, the headline has some hyperbole. Let’s talk about what the NY court did do, and then get to the whys.

What The Order Does

  • By judicial order the Trump Organization cannot transfer assets out of the state of NY without prior approval of the court. The company must provide at least 14 days notice to the court before attempting any such transfer.

Technically, the monitor practices “oversight,” and not control, but he is required to report any violations of the order to the court and NYAG.

Why Did The Court Do This?

After a three year investigation, that included deposing Trump personally (where he pled the 5th), the New York Attorney General, acting for the State of New York, sued the Trump Organization, Donald Trump personally, and various members of his family for fraud. The lawsuit alleged years of persistent and rampant corporate fraud. The numerous schemes generally inflated property worth for purposes of serving as collateral for loans (bank fraud) while undervaluing often the same properties for tax purposes (tax fraud).

Under New York law such a lawsuit can compel the dissolution of a company found to operate “in a persistently fraudulent or illegal manner.” The NYAG sought exactly that, along with at least $250 million in damages.

Unsurprisingly, a company facing such a threat might try to get the Hell of Dodge, or in this case, the State of New York. It could begin transferring business operations and assets out of state, where New York could no longer reach it.

However, this is not the State of New York’s first rodeo in dealing with large corporations seeking to dodge penalties for fraud by leaving. New York law permits the NYAG to apply for an injunction, such as the judge approved today, blocking the corporation from doing that.

The Legal Standard And The Evidence. The Court Says The Evidence Shows Trump Is Guilty.

The legal standard for granting such an injunction is a fairly straightforward two prong test:

  1. Has the state demonstrated that it is likely to succeed on the merits?

This is where I found the decision most interesting. In applying this standard the judge used language suggesting his belief that the defendants are guilty. The judge didn’t use language suggesting the NYAG is likely to prevail. Rather, the judge used language suggesting the NYAG will prevail. For example:

“defendants have failed to submit an iota of evidence, or an affidavit from anyone with personal knowledge, rebutting OAG’s comprehensive demonstration of persistent fraud.” [note: “OAG” stands for “Office of the Attorney General”]

Consider this, appearing shortly after:

“for present purposes, the Court need not detail every instance of fraud found in the record, the following examples are particularly compelling.”

“Fraud found in the record” seems a clear declaration of the court that fraud is found in the record. The court then provides about half dozen specific examples that it describes in terms of being fraud, not merely likely fraud.

However, my favorite piece of evidence for fraud is that Trump in his deposition pled the 5th. As I have repeatedly stated on Medium, in a civil case that is nearly tantamount to an admission of guilt. The court treated it as such:

“this Court is permitted, and is here persuaded, to draw a negative inference from Mr. Trump’s invocation of his Fifth Amendment right against self-incrimination more than 400 times in response to questions posed to him during his deposition.”

When balancing the equities involved the court continued to suggest that Donald Trump and his company are guilty.

“given defendants’ demonstrated propensity to engage in persistent fraud, failure to grant such an injunction could result in extreme prejudice to the people of New York.”

There you have it. What really happened today, and why it happened. The MAGA world won’t accept it, but yet another court determined Trump is a crook.

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Keith

Retired lawyer & Army vet in The Villages of Florida. Lifelong: Republican (pre-Trump), Constitution buff, science nerd & dog lover. Twitter: @KeithDB80