UNBIASED - Special Report: Trump's $354.9M New York Civil Fraud Ruling + Listener Q&A

Episode Date: February 21, 2024

In this episode, we're diving deep into the recent ruling out of New York finding Donald Trump and his co-defendants liable for fraud and ordering Donald Trump to pay the state of New York $354M. You can expect: a 10-minute synopsis of the case, the relevant laws at issue, the main arguments presented by both sides, a 10-minute explanation of the ruling, and a 25-minute Q&A (questions submitted via Instagram).1. Basis of the Lawsuit (0:58)2. Main Arguments Presented By Both Parties (10:58)3. Judge Engoron's Ruling (17:55)4. Listener Q&A (26:38)If you enjoyed this episode, please leave me a review and share it with those you know that also appreciate unbiased news!Watch this episode on YouTube.Follow Jordan on Instagram and TikTok.All sources for this episode can be found here. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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call the Conax Ontario helpline at 1-866-531-2600. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Welcome back to Unbiased, your favorite source of unbiased news and legal analysis. I'm your host, Jordan, and I hope you enjoy the show. Welcome back to Unbiased. Today is Wednesday, February 21st, 2024, and we are deep diving into the New York civil fraud ruling that was just released on Friday. So how this episode is going to work is I will first talk about the basis of the case. I'll discuss the arguments on both sides. We'll get into the judge's ruling, and then I'll do a Q&A and answer some questions that you guys submitted on Instagram. Of course, if you love what you hear today and you feel like you learned a lot and that this, you know, episode was beneficial for you,

please go ahead and leave me a review on whatever platform you listen on. If you're a YouTube watcher, hit that thumbs up button, subscribe to the channel. All of those things really help my platform. So let's just dive right in. Let's first talk about the basis of the case. Donald Trump and multiple entities under his control own or owned various properties around the country. These properties include, but are not limited to, Mar-a-Lago in Palm Beach, Florida, Trump Tower in Manhattan, Nike Town, which is comprised of two ground leases adjoining Trump Tower in Manhattan, Trump Park Avenue in Manhattan, 40 Wall Street, also in Manhattan, Seven Springs Estate in Westchester County, New York, Trump Hotel in Chicago, Trump Old Post Office, as the lawsuit calls it, or Trump International in DC, 10 golf clubs around the country, actually eight are here in the United States, two are out

of the country in Scotland, and then Trump National in Doral, Florida, which is also a golf course. All of these properties were assets owned, were or are assets owned by the Trump Organization. When I say Trump Organization, just know that Trump Organization consists of about 500 separate entities and it's by and through these various entities that these properties are owned. But Trump Organization is sort of the umbrella that covers all of these smaller entities. Donald Trump being the president of Trump Organization and the one who signs off on various financial statements is, of course, one of the main defendants in the case. Basically, what the lawsuit says, and this is as simplified as possible, is that from 2011 through 2021, Trump and the higher-ups within the Trump organization

falsely inflated Trump's net worth and the valuations of these various properties in order to obtain loans from banks for more money at lower interest rates. Because obviously, the more assets you have, the more you're worth, the less risky it is for the banks to loan you the money, so the lender will grant you more favorable loan terms. Along similar lines, the lawsuit says that these false financial statements allowed Trump to obtain insurance coverage for higher limits at lower premiums. And that is where the insurance fraud cause of action comes into play, though it's, you know, the insurance fraud is a much smaller piece of this lawsuit. The bulk of the lawsuit is about the financial statements. So let's talk about those for a second.

You're looking at a financial statement, particularly a statement of financial condition. That is what's at issue here. You have assets and you have liabilities. On the assets side, there are five basic categories. One, cash and cash equivalents. Two, monies held in escrow and reserve deposits. Three, interest in partnerships and joint ventures. Four, real estate licensing fees.

And five, real estate holdings. Then, on the liability side, you have accounts payable and accrued expenses. You have loans on real and operating properties. And you have other mortgages and loans. When you take the difference between the total assets and the total liabilities, that is how you calculate Trump's quote-unquote net worth. So in essence, New York Attorney General Letitia James says that Trump and the Trump Organization would purposely and falsely inflate the assets by and through both the cash and cash equivalents, as well as the various real estate holdings, and this would result in a false, misleading, and inflated net worth.

Now, there were seven causes of action in the complaint. One, persistent and repeated fraud. Two, falsifying business records. Three, conspiracy to falsify business records. Four, issuing false financial statements. Five, conspiracy to falsify false financial statements. Six, insurance fraud. And seven, conspiracy to commit insurance fraud.

Now, let's talk about the laws at issue because one of the most frequently asked questions from you guys on Instagram was what law is being violated because there's some confusion surrounding this. So section 63 of the New York executive law is is the law that is at issue here. But here's the thing. Section 63 of the New York executive law doesn't doesn't exclusively target fraud. What it does is it lays out the duties of the attorney general, and within those duties, particularly subsection 12, the attorney general is granted the authority to prosecute fraud. What subsection 12 says is this, quote, whenever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting, or transaction of business, the Attorney General may apply, in the name of the people of the State of New York, to the Supreme Court of the State of New York for an order enjoining the continuance of such activity, directing

restitution or damages, and in an appropriate case, canceling any business certificates, end quote. So it's basically giving the attorney general the authority to file this lawsuit with the court, you know, and seek out these damages for any persistent fraud that a business takes part in. One distinction I want to make before we move on is regarding the Supreme Court of the state of New York. Each state uses different names for the courts within their judicial system, and New York is a little confusing. We're all used to the Supreme Court being at the top of the hierarchy, right? The Supreme Court of the United States is obviously the top court in this country, and even the Supreme Courts at the state level are the top courts in most states. But in New York, the state Supreme Court is the name of the low-level court.

So in New York, the order of the hierarchy from lowest to highest goes state Supreme Courts, then intermediate appellate courts, and then at the top is the state court of appeals. And this is a little confusing, but the reason that I want to clear it up is because this civil fraud trial took place at the state Supreme Court, which is consistent with the New York executive law at issue here, which gives the attorney general the authority to bring, you know, these types of cases on behalf of the people of New York. But when you hear Supreme Court, it's not going directly to the highest court in the state. It's actually the lowest court.

So I just want to clear that up. Other laws that the lawsuit cites to include various sections of the New York penal laws, specifically Section 175.45, which prohibits the issuance of false financial statements, conspiracy under the New York Penal Law, and insurance fraud under the New York Penal Law, Section 176.05. But I just want to be clear that the bulk of this lawsuit surrounds that, you know, Section 63, Subsection 12 of the New York executive law. That is what gives the attorney general the authority to bring a lawsuit against an individual or an entity that is perpetrating consistent and repeated fraud within the state. So that is the law that this whole lawsuit is based around. Now, the last thing I want to touch on before we move on into the arguments is the

damages. This is also something a lot of people are really confused about. Aside from the request to cancel business certificates and the request to bar Trump and his co-defendants from serving as officers or directors of any New York corporations, Letitia James also asked for equitable relief in the form of disgorgement. Originally, she asked for $250 million, but then at the start of the year after witness testimony had concluded in the trial, but before closing arguments took place, she increased the damages request to $370 million plus interest. At the time of the filing for modified damages, she explained that her request was due to new evidence that had come to light throughout the course of the old post office building in DC, 60 million in profit from

the sale of the golf course in New York, and two and a half million in bonuses. So this totaled 370 million, and that's why she modified her damages. Now, disgorgement is a certain type of relief that essentially requires a defendant to pay back any ill-gotten gains. So it's a little different than if you were to, let's say, sue someone for defamation and ask for monetary damages to compensate you for any reputational harm you may have suffered. Monetary damages in that sense would require the defendant to shell out money to compensate for his or her wrongful act, right? Discouragement, on the other hand, is a way to force a defendant to return any money he or she made in conducting illegal behavior. So it's different. With discouragement,

you are putting the defendant back in a position he or she would have been in without the illegal behavior. This is why disgorgement is considered an equitable remedy and not a legal remedy like compensatory damages would be in a defamation case. a little bit more in the Q&A because some of the other questions deal with equitable relief as well. But, you know, a lot of you asked how Trump is being forced to pay this money when none of the banks lost any money on the loans that were issued. And that is your answer in short, but we'll touch on it more a little bit later. Let's move on to the arguments presented on both sides. And just know I am not here to dive into each expert witness and what their testimony was and all of the little details of the trial. Instead, what I'll do is provide a bird's eye view of the arguments on both sides, and then we'll get into the judge's ruling. Sound good? Okay. So let's start with the plaintiff, the people of the state of New York, brought by Attorney General Letitia James.

For the sake of not repeating myself, I am not going to go over the basis of the lawsuit again. Instead, what I would like to do is just give a few examples of the misrepresentations that were alleged in the lawsuit. Number one, in July 2020, the Trump Organization received an appraisal with a value of $84.5 million for Trump Park Avenue. But on the 2020 financial statement, the Trump Organization valued Trump Park Avenue at $135.8 million and did not disclose the prior appraisal. Second example in the lawsuit, the leasehold interest for 40 Wall Street, the lender ordered appraisal in 2015 valued that property at $540 million. That same year, the statement of financial condition listed the valuation at $735 million. Third example, when it comes to Mar-a-Lago, and this is probably the property that's caused the most controversy,

the attorney general says that Trump obviously overvalued the property, but also didn't take into account the restrictions on the property when calculating its valuation. In other words, Mar-a-Lago, as per an agreement signed by Trump, was precluded from being used as anything other than a social club. This meant that the residential subdivision and other uses of Mar-a-Lago were heavily restricted. But, according to the lawsuit, Trump's statement of financial condition from 2011 to 2021, quote, purport to value Mar-a-Lago as if it were an unrestricted home to be sold to an individual rather than the heavily encumbered historical landmark restricted to club usage that it was, end quote. So all of the allegations are along these lines. The valuations of the various properties were misrepresented and calculated in such a way

that allowed Trump to benefit from better loan terms. And again, this is all from the plaintiff's side. Let's move on to Trump's side. Trump's rebuttal to that is that this isn't fraud. He says this is just a different valuation that I'm using. The attorney general is using an appraisal value, whereas we are using a fair market value. Two different methodologies, but it's not fraud. Trump also focused on three other main arguments, the first being the

worthless clause. This also is known as the disclaimer argument, and it stems from the disclaimer written on his financial statements that says in part, quote, considerable judgment is necessary to interpret market data and develop the related estimates of current value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized upon the disposition of the assets or payment of the related liabilities. The use of different market assumptions and or estimation methodologies may have a material effect on the estimated

current value amounts. Because the significance and pervasiveness of the matters discussed above make it difficult to assess their impact on the statement of financial condition, users of this financial statement should recognize that they might reach different conclusions about the financial condition of Donald Trump if they had to access a revised statement of financial condition without the above-reference exceptions to accounting principles generally accepted in the United States of America. End quote. So what Trump argues is that this disclaimer says, essentially, do your own due diligence, do your own work, do your own study, don't take anything

from this statement for granted. Here is your warning that these statements may not be correct. And so he's saying that this disclaimer is sort of a shield for him. It insulates him from liability. The second argument that he puts forth is that there's a lack of evidence of a conspiracy. More specifically, that the state attorneys failed to prove their allegation that Trump took part in a conspiracy to inflate his net worth. Trump's attorney argued that there was no evidence in the record of any actual agreement between Trump and a co-conspirator. And an agreement is obviously a fundamental component of conspiracy. Now, of course, the state's main witness, Michael Cohen, Trump's former attorney, claimed Trump had told him to

inflate his net worth, which would ordinarily be sufficient to support the agreement component of conspiracy. And the judge, in fact, used Michael Cohen's testimony in finding, you know, Trump liable for conspiracy. But what Trump's attorney argued is that Cohen's testimony is not credible because of Cohen's history of lying on the stand. Those who don't know, Michael Cohen pled guilty in 2018 for lying to Congress. So Trump's argument there is just not enough evidence exists.'t know, Michael Cohen pled guilty in 2018 for lying to Congress. So Trump's argument there is just not enough evidence exists. You know, the state attorneys did not meet their burden in proving a conspiracy. The fourth and final argument that I want to run through is perhaps the most relied on argument, and that is that none of the lenders lost money. He never defaulted on

his loans and that all of his lenders were happy to do business with him. In support of this argument, Trump had one of the bank executives from Deutsche Bank testify on the stand that, you know, Deutsche Bank was eager to get Trump's business and would actually court him in order to get Trump's business. The executive testified that Trump was a worthy client because of the millions of dollars that the bank would ultimately earn in interest and fees from the loans that it lent to Donald Trump. So because there were no victims here, Trump can't be on the hook for fraud. That's what he says. The New York Attorney General countered this argument by citing to the fact that the statute of

issue here, New York Executive Law 6312, doesn't require a victim and that even if it did require victims, the banks could be seen as the victims because they could have charged higher interest rates on the loans if they knew Trump's true net worth was lower than he claimed. So she says, yeah, in a way, even if I had to prove a victim, the banks were victimized here. Those were the main arguments on both sides. So knowing that, now let's talk about how the judge ruled. And I think the best way to do this is by reading the summary of the ruling and then breaking it down by the arguments we just talked about. So here's what the summary says, quote, Donald Trump and entities he controls own many valuable

properties, including office buildings, hotels, and golf courses. Acquiring and developing such properties required huge amounts of cash. Accordingly, the entities borrowed from banks and other lenders. The lenders required personal guarantees from Donald Trump, which were based on statements of financial condition compiled by accountants that Donald Trump engaged. The accountants created these compilations based on data submitted by the entities. In order to borrow more at lower rates, defendants submitted blatantly false financial statements to the accountants, resulting in fraudulent financial statements. When confronted at trial with the statements, defendants' fact and expert

witnesses simply denied reality, and defendants failed to accept responsibility or to impose internal controls to prevent future reoccurrences. As detailed herein, this court now finds defendants liable, continues the appointment of an independent monitor, orders the installation of an independent director of compliance, and limits defendants' right to conduct business in the state of New York for a few years, end quote. So naturally, through reading that, we can conclude that the judge found that the attorney general proved by a preponderance of the evidence that the allegations were true. As for the disclaimer clause argument, or the worthless clause, whatever you want to call it, the judge had previously addressed this defense in his summary judgment ruling back in September and also in an even earlier order in November of 2022. And what the judge said as it pertains to this argument is one, the law is clear that using a disclaimer as a defense to reliance requires proof that the

disclaimer is made sufficiently specific to the type of fact misrepresented and that the alleged misrepresentations did not concern facts peculiarly within the defendant's knowledge. Therefore, the judge said, because the statements of financial condition did not particularize the type of fact misrepresented and were unquestionably based on information peculiarly within Trump's knowledge, Trump cannot rely on the disclaimers as a defense. Furthermore, the judge also noted that the disclaimer, while it's true, it says, you know, what Donald Trump alleged in his defense, also says, quote, Donald J. Trump is responsible for the preparation and fair presentation of the financial statement in accordance with accounting principles generally accepted in the United

States and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statement, end quote. As for the lack of evidence proving a conspiracy argument, the judge says that there was ample evidence proving conspiracy. Keep in mind that the crime of conspiracy is when at least two people agree to carry out a crime and some overt act is taken in furtherance of that crime. And honestly, the judge didn't really expand in his ruling as to the conspiracy proof. He basically referred to the evidence in favor of falsifying documents as his basis for finding conspiracy. But in the judge's discussion of falsifying business records, there was no

mention of an actual agreement between parties to commit a crime other than a brief discussion of the Trump Organization's CFO understanding his assignment from Trump to be increasing Trump's assets year over year, irrespective of their actual values. But there really was no real depth in that part of the ruling as it pertains to conspiracy. And finally, regarding the victimless argument, the judge says there doesn't need to be victims in order to find that Trump broke the law. And the judge cited to a prior ruling out of New York that held, quote, where there is a claim based on fraudulent activity, disgorgement may be available as an equitable remedy, notwithstanding the absence of loss to individuals.

Disgorgement is distinct from the remedy of restitution because it focuses on the gain to the wrongdoer as opposed to the loss to the victim. Accordingly, the remedy of disgorgement does not require a showing or allegation of direct losses to consumers or the public. The source of the ill-gotten gains is immaterial. End quote. So that's what he says about the various or the main arguments, I should say, set forth by Trump.

Then the ruling talks about the disgorgement amount. So how did he reach $354.9 million? Well, first he went with one of the plaintiff's expert witnesses calculations of interest rate savings. In other words, how much did Trump save in interest by inflating his net worth? What's the difference between the interest rate he got because of his misrepresentations and the interest rate he would have received if he didn't misrepresent his assets. And there are four loans that we're focused on here in determining the interest rate savings. The Doral loan, the old post office loan, the Chicago loan, and the 40 Wall Street loan. One, two, three, four. Yeah, that's four. Why

these four though specifically? The reason these four are focused on is because these are the four properties that he obtained loans for within the time period of 2014 to 2022. And as a side note, the starting date here is 2014 because the statute of limitations barred including anything before 2014. So when the expert witness calculated the interest savings on these four properties combined, he calculated roughly $168 million. Then the profits on two of the properties were calculated, the old post office property and the Ferry Point golf course, two properties that were sold after 2014. So how much more did the Trump organization profit on the sale of these properties than they would have without the misrepresentations? The judge determined that roughly 126 million were ill-gotten profits on the old post office

sale and $60 million were ill-gotten profits on the sale of Ferry Point. So when you add up the $168 million in interest savings, the $126 million in profits from the old post office sale, and the $60 million in profits from the Ferry Point sale, you get $354.87 million. And that is how the judge reached the final number. Now, aside from the disgorgement award, here are some other notable mentions from the ruling. One, Eric Trump and Donald Trump Jr. both have to pay $4 million for their role in the fraudulent acts. Allen Weisselberg, who is the Trump Organization's former CFO, has to pay $1 million. Donald Trump, Allen Weisselberg, and Jeffrey McAuley, the former corporate controller of the Trump Organization, are barred from serving as officers or directors

of any New York corporation for three years. Weisselberg and Mconaughey are permanently barred from serving in the financial control function of any New York corporation. Trump and his various entities are barred from applying for loans from any New York registered or New York chartered bank for three years. Eric Trump and Donald Trump Jr. are barred from serving as officer or director of any New York corporation for the next two years. Trump's business certificates won't be canceled. This is a change from the summary judgment we saw in September. So this is something the judge

originally directed, the cancellation of business certificates, in the 2023 summary judgment, but has since changed his mind on. And lastly, per the ruling, an independent director of compliance will be put into place at the Trump organization in order to ensure compliance with financial reporting and also to establish internal protocols. So finally, it is time for the Q&A. I picked 19 questions, submitted on Instagram. I tried to consolidate a lot of them, but hopefully after this Q&A, you will have a lot of your questions cleared up.

Number one, why was there no jury in this case? Well, with court cases, you either have a jury trial or you have a bench trial. In a jury trial, obviously the jury is the one that hears all the evidence and renders the verdict. In a bench trial, the judge or a panel of judges hears the evidence and renders the verdict. Trump's case was a bench trial. Here is why. In civil cases, as a plaintiff, you can either ask for equitable remedies or legal remedies. And we touched on this a little bit earlier, but legal remedies involve damages, whereas equitable remedies involve things like disgorgement, which is what was sought here. Legal remedies such as, you know, compensatory damages, punitive damages can be determined by a jury, whereas equitable remedies are tried to the judge. So in this case,

disgorgement being an equitable remedy meant that this case was one for the judge, not a jury. Now, I do want to mention that Trump's attorneys did not challenge the fact that there would be no jury. They could have, but they didn't, not to say that if they challenged it, it would have been successful, but they could have challenged it. And even Trump's attorney, you know, addressed it at a hearing prior to the start of trial when the judge explained why there wouldn't be a jury. Trump's attorney kind of turned to the press and said, did you hear that? I didn't forget to check a box because that was one of the rumors swirling around.

So it's clear that the decision on Trump's side not to challenge the bench trial was an intentional decision. Question number two, is being liable similar to being guilty? Similar, yes, but also different. The term liable is used in civil cases, whereas the term guilty is used in criminal cases. So when a defendant is found liable for something, the defendant will typically have to compensate the harmed plaintiff in some way. That's obviously not the same as criminal cases, right? When someone is found guilty in a criminal case, they typically receive a punishment in the form of jail or, you know,

maybe probation or something. So whenever you're talking about civil matters, you always use the word liable. And whenever you are talking about criminal matters, you always use the word liable. And whenever you are talking about criminal matters, you use the word guilty. So similar terms, but they do have their differences and their own right times to be used. Question number three, how reasonable is it to assume that this judgment will be overturned? You know, it depends on the panel of appellate judges. And we see that all the time, right? Certain judges will rule one way, other judges will rule another, even the Supreme Court. They can rule one way depending on the justices on the bench and then rule a completely different way with a different set of justices on the bench. And this is because a judge's job is to interpret the law. And while

a judge has the duty to remain impartial, a lot of things play into the interpretation of the law, including personal views. So I don't know if I would go as far as to say it's reasonable to assume that the judgment will be overturned on appeal. as far as to say it's reasonable to assume that the judgment will be overturned on appeal. Instead, I would say it's reasonable to think there's a chance it could be overturned on appeal. What I mean by that is I don't think this is enough of a cut and dry case either way to say yes or no one way or the other.

It all comes down to the panel of judges and how they interpret the laws at issue and just really how they deal with the issues that are presented and the arguments that are presented. Question number four, why is there no plaintiff? I thought all cases had to have a plaintiff. Well, there is, there is a plaintiff. The plaintiff is the people of the state of New York. There's always a plaintiff in every case. As I mentioned earlier, the particular law at issue

that the attorney general brought this lawsuit under, Executive Law Section 63, allows the state to bring an action against a person or an entity who commits fraud within the state on behalf of the people of that state. So that's why the plaintiff in this case is the people of the state of New York. Does that make sense? Question number five, will he go to jail? In this case, no, you don't go to jail in civil matters. You only go to jail if you're found guilty of a crime, and this is not a criminal case, but I will address this question on a broader scale because he is, of course, facing criminal charges elsewhere, and this is a question that I've actually been asked a lot, not just on social media either. My friends and family ask me this question all the time, but based on my experience with the law and my knowledge of the law and, you know, constitutional issues and all that stuff, even if he is found guilty of a crime at some point in the future, I do not believe he will go to jail.

And here's why. Think about the level of additional protection that he would need and the constitutional rights of the members of the Secret Service. So, one, if Donald Trump were to go to jail, he would need an insane amount of added protection, right? Now, you can't put him in solitary confinement forever, and he's not going to go to his own facility. So what do you do in that situation? And I don't know if it's a question that courts are willing to answer, let alone the Supreme Court. I just, that's a whole other beast. And number two, and perhaps most importantly, because Trump has the lifetime protection of Secret Service, and every president does, what would happen with the Secret Service agents? You can't violate their constitutional rights and

send them to jail with Trump. And it's not like they're going to work shifts at the prison. So for those reasons, no, I don't believe he'll go to jail, even if he's found guilty of a crime at some point in the future. I just don't think a court is willing to go there. But just remember, this case out of New York is not a criminal case. So there's a 0% chance he would go to jail as a result of this particular ruling that we're talking about in this episode. Unless maybe he was found in criminal contempt for not paying the judgment or something, but even that would be very far-fetched and he wouldn't end up in jail for that. Question number six, since it's civil, does it hold any weight in eligibility for the election? No. And even a criminal conviction doesn't bar someone from

running for president. So this case won't affect his eligibility at all, but neither would a criminal conviction. Question number seven, what is the appeals process? From here, Trump will post the judgment amount into an escrow account, or he can obtain an appeals bond. And from there, he will appeal this case to the Intermediate Appeals Court in New York. And then after that, if another appeal is warranted, the case would then case to the Intermediate Appeals Court in New York. And then after that, if another appeal is warranted, the case would then go to the Court of Appeals, which is the highest court in the state of New York. Question number eight, will this change anything? Yeah, I mean, there are, of course, changes that stem from this decision. For one, as of now, at least, and unless this decision is overturned,

Trump and his sons can't serve as officers or directors of the Trump Organization or any other New York corporation. Trump can't get loans from New York chartered banks, which encompasses a lot of banks for the next few years. So that might affect his business. The Trump organization will have to appoint a new president. Trump's financial status may change. He'll have to spend millions more on legal fees for the appeals process. But if we're talking big picture, it's not going to change much as far as the election is concerned or anything, but it'll sure change some things for Donald Trump and the people around him. Question number nine, who will run the existing businesses and hotels in New York? That is something they'll have to figure out within the organization. I don't have the inside

scoop. I have no idea. Question number 10, when does he have to pay the fines? Well, he'll either have to put the $400 million in a court-ordered escrow account or get an appeals bond before he can appeal. And this is pretty standard. So the money won't go to the state of New York right away. It's basically just held until there's a final disposition in the case, right? And the reason that it's $400 million and not the $355 million is because the ruling was $355 million in disgorgement. But then you have to add on the 9% post-judgment interest to that amount and you get roughly 400 million. And just as an aside, if he doesn't pay, which his attorney has already said that he will, but hypothetically, if he doesn't, then the judgment would take effect immediately.

His assets would then start to be seized. I don't think that'll be an issue here, but the attorney general did say she is ready to seize assets if he doesn't pay. Question number 11, how can the judge order payment prior to appeal? It's not necessarily out of the norm to do so. It's actually pretty standard. If you have a judgment against you, you can ask the court to stay the enforcement of that ruling while you appeal. But in some cases, you have to put the money equal to the judgment, you know, into a court-ordered account while the appeal is playing out. Or as I said, you can get a bond, but that's just the way it is. They want to make sure that you're going to pay

the judgment if you lose the appeal down the road. So not too crazy. Question number 12, why is the awarded money going to the state? Who exactly lost the money? Well, the awarded money is going to the state because the lawsuit was filed on behalf of the people of the state. It's not that anyone lost money. In fact, no one lost money, right? But again, discouragement is meant to prevent illegally obtained profits. It's a deterrent. It's not meant to compensate. So remember, this is different than let's say, let's say the banks had lost money and the banks were the one who brought the lawsuit and, you know, they were seeking restitution or compensatory damages. Then any money awarded would go to them. But this is a different story.

The attorney general brought this lawsuit under a particular New York law on behalf of the people of that state. So the money will go to the state. And I don't know how else to explain this. It's just a deterrent. It's a penalty. It's not meant to compensate anyone. Question number 13. What were the actions he took to inflate the value? How was he able to claim a higher value? Well, this kind of depends on who you ask. The New York Attorney General will say that he inflated the assets by value? Well, this kind of depends on who you ask. The New York Attorney General will say that he inflated the assets by, you know, disregarding outside appraisals, using objective numbers, purposely lying about the value of properties, whereas Trump will say he used different accounting and valuation methods which reflect true and accurate amounts. So just

to kind of paint the picture, as an example, the New York Attorney General used appraisal values throughout most of the lawsuit, whereas Trump relied on market values. Appraisal values and market values are not the same thing, and typically the appraisal will reflect a valuation less than a fair market valuation would. Take Mar-a-Lago, for example. The judge found that Trump had overvalued Mar-a-Lago by at least 2,300% compared to the assessor's appraisal. And it's not necessarily abnormal to calculate a fair market value above the appraisal value, but at the same time, keep in mind, just because an appraiser may have lowballed the valuation of Mar-a-Lago doesn't necessarily mean Trump used a fair valuation either, right? There's truth that lies somewhere in the middle. You can kind of picture the situation as if your

two best friends get into an argument. You're trying to figure out what happened. One friend is telling their side of the story. The other friend is telling their side of the story. And each side is so different that you realize there has to be truth somewhere in the middle, right? That's kind of what we're dealing with here. It's kind of what's happening here. So again, according to the judge and the New York attorney general, Trump purposely and intentionally misrepresented the valuation of his properties in order to obtain better loan terms. But according to Trump, he simply used the

fair market value instead of the appraisal value. And it's just a different methodology, but it's not fraud. Question number 14. Could Trump file for bankruptcy yes he could personally file for bankruptcy which would pause the enforcement of the judgment but he likely won't take that avenue because in order to file for bankruptcy he would have to prove that the damages amount exceeds his total net worth and he's consistently said that his net worth on his financial statements was understated, not overstated. In fact, in an April deposition, he said that he had roughly $400 million in cash alone. Forbes estimated his net worth of around $2.6 billion. So if $2.6 billion, I just want to make that clear, I said B, not M, B. So if that's true and his net worth is substantially higher than the judgment amount of 355 million,

he wouldn't be able to file anyway because he wouldn't be able to prove what he has to prove. Now, if the Trump organization were to file for bankruptcy, that would put the judgment on Trump and Trump would be personally liable for all of it. So he definitely wouldn't want to do that either. I don't see any bankruptcy proceedings happening here unless Trump really does just run out of money one day, then potentially we'd see a bankruptcy proceeding. But I don't think we'd see one as things stand right now. Question number 15. Can Trump use campaign funds to pay the judgment? No. Unlike a lot of Trump's other cases, this case was

related solely to his business activities, right? It didn't have anything to do with his campaign or his conduct as president. So regardless of whether you think this is a political witch hunt or election interference or whatever, the fact of the matter is that the allegations at the core of this lawsuit deal with Trump's businesses outside of his life as a politician. So because there's a general ban on, you know, not using campaign donations for personal uses that are unrelated to a campaign or the official duties of an officeholder, he could not use campaign funds to pay for this judgment. Question 16. Are the fine amounts cruel and unusual? Will the Eighth Amendment be the focus of his appeal? This is a deeper question than you might think, so bear with

me while I analyze this from a legal perspective. This is going to be a long answer for what could probably be answered in two sentences. The Eighth Amendment says that excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishment inflicted. And in 2019, the Supreme Court unanimously held that the excessive fines ban does in fact apply to the states. So this is definitely something Trump could bring up on appeal, but it won't be his main focus. His main focus will be on the actual finding of fraud and all of the other arguments we discussed earlier. But here's the thing.

The Supreme Court in 1993, in a case called Austin v. The United States, said that the excessive fines clause limits the government's power to extract payments as punishment for an offense. To be considered a fine, what the court said, a payment must serve in part to punish. Now, disgorgement would likely satisfy that. It is in a way meant to punish. But that was a criminal case. The Supreme Court has treated civil cases and civil fines very differently. The precedent is not nearly as clear when it comes to civil penalties such as the one that was just imposed on Trump. In fact, just last year, in 2023, an 80-year-old

woman, her name was Melissa Toth, she petitioned the Supreme Court to hear her case. What happened to her is the IRS had assessed a civil penalty against her in the amount of $2.1 million plus another $1 million in late fees and interest. And this was around 75% of her account balance. So she sues alleging that this penalty was excessive and prohibited by the Eighth Amendment. The appellate court below upheld the district court's decision, which was that the Constitution's protection against excessive fines did not apply to her case because the IRS's assessment against her wasn't tied to any criminal sanction and instead served a remedial purpose. So she takes this to the Supreme Court, and the Supreme Court denies her petition. They wouldn't hear the case. And Justice

Gorsuch was not happy. So Justice Gorsuch actually wrote a dissenting opinion. And as I've said before, in orders, you don't have to write dissenting opinions, but you do when you're passionate. And what Justice Gorsuch said is this. He said, quote, this decision is difficult to reconcile with our precedents. We have held that protection against excessive punitive economic sanctions is fundamental and deeply rooted in this nation's history and tradition. And all that would mean little if the government could evade constitutional scrutiny under the clause's terms by the simple expedient of fixing a, quote, civil label on the fines it imposes and declining to pursue any related criminal case. Ms. Toth and her brief identify still more reasons to worry about the lower

court's decision. They observe that it incentivizes governments to impose exorbitant civil penalties as a means of raising revenue, and they contend that it is difficult to square with the original understanding of the Eighth Amendment. For these reasons, taking up this case would have been well worth our time. So basically, what Justice Gorsuch is saying is, you know, governments can just basically say, oh, we're not going to pursue criminal charges so that we can slap on a heavy civil fine and get away with it because there's nothing to say we can't now of course the obvious difference between trump's case and toth's case is that trump's award was a court ordered award sure the government requested it but it wasn't a government ordered penalty like toth's was toth's penalty was from

the irs so there's a big difference there but it does sound like Gorsuch was kind of foreshadowing a problem wherein governments would use civil penalties as a means of, as he said, raising revenue and not be checked under the Eighth Amendment because it's a mere civil penalty without any sort of criminal ties. So again, we don't have clear binding precedent as to the constitutionality of excessive civil fines. But aside from the civil component, the other question would be, is the fine egregious compared to the crime committed? That's the basis for determining whether a fine is excessive, right? And the Supreme Court has chimed in a little bit when it comes to disgorgement specifically. It was a more recent case. It was a 2020 case dealing with the SEC. And the holding said that the SEC can disgorge ill-gotten profits so long as it reflected the profits illegally obtained and nothing more. But again, that was a criminal case, and we don't know if the Supreme Court would treat

civil fines differently. That actually leads me to believe, now that I'm thinking about it, if it reflects the profits illegally obtained and nothing more, I don't know how interest savings would be able to be included in that award as it was for Trump. But again, I'm kind of just like rambling and thinking about this from a legal perspective. To get back to the root of the question, yes, Trump can certainly challenge the award as excessive under the Eighth Amendment, but it certainly won't be the main focus of the appeal. As I said, the main focus of the appeal will be all of those other arguments that I discussed earlier. And that actually brings me to question number 18, which is what will be the basis of the appeal well trump is definitely going as i as i've said

five times going to focus on the arguments set forth at trial those being that there were no victims here that the banks wanted to work with him that the financial statements weren't relied on by the banks because it was within their ordinary course of business to conduct their own appraisals reliance the reason that's important is because reliance is one of the requirements for a fraud finding. And also the disclaimer clause argument. So obviously there are other arguments as well, like whether disgorgement is even the proper remedy here, whether the people of the state of New York needed to have suffered any loss for the attorney general to have even brought this lawsuit under this particular law, considering the people of New York are, you know, they are the named plaintiff. But the focus will be on all of the main arguments presented at trial.

Question number 18. Fraud is a criminal offense. Why have no criminal charges been laid with regards to this whole saga well fraud can actually be either criminal or civil but the most likely reason that the attorney general went for a civil lawsuit rather than the criminal charges is because the law that she brought this suit under allows her to bring this lawsuit without explicitly requiring a victim on top of that criminal cases come with a higher burden of proof. So that may have played a part too. In civil cases, the plaintiff just needs to prove their claim by a preponderance of the evidence, which is to say that it's more likely than not that the alleged thing happened.

Whereas in criminal cases, the burden of proof is much higher. That being beyond a reasonable doubt. So there's a few different reasons as to why the attorney general felt that this lawsuit was a better route to take, but to be clear, fraud can be both criminal and civil. And finally, question number 19, why were the testimonies so polar? The bankers and expert accountants said Trump did nothing wrong. That's just the law, baby. No matter what the issue is, each side is going to present their own expert witnesses that are going to testify in that party's best interest, and naturally it ends up being very polarizing.

As the plaintiff, you hire expert witnesses to testify in support of your allegations and against the defendant's defenses. And as the defendant, you hire expert witnesses to testify in support of your defenses and against the plaintiff's allegations. So again, naturally, you're going to have very polarizing testimony. That's just the way that it goes. That is what I have for you today. Thank you so much for being here. I truly hope you learned a lot. I hope I got to most of your questions. I so appreciate you. I hope you have a phenomenal next couple of days because I'll be talking to you on Friday, so we don't have to wait that long. I'll see you Friday.