Trumped-up charges  

A lawsuit that bears watching is that of New York versus former president Donald Trump.

Letitia James, NY attorney general, alleges with a flourish that instead of the “art of the deal” (referring to his self-aggrandizing book), Donald Trump excelled at the “art of the steal”. She goes on to enumerate many, many instances, contained in a 220-page complaint, of Trump’s fraudulent activities.

Natch, the orange guy fires back, saying this was just a witch hunt. For us to believe his claim, we would have to ignore the reports that Trump’s team offered to settle the case before it could be filed. But signaling that she believes her case was sound and strong, the attorney general rejected the settlement offer. Instead, she proceeded to sue Trump, asked for his company to be dissolved, and for him to pay damages of $250 million dollars (with the way the exchange rate has been spiraling down lately, I won’t even bother converting that amount to pesos).

If this were a witch hunt, do we think Trump would have offered to settle the case? Bear in mind, as well, that his CFO, Allen Weisselberg, has just pled guilty to tax evasion. In his plea deal, the CFO agreed to testify against the Trump Organization. With a member of his inner circle poised to give evidence against him, I do think this witch should feel hunted.

This is looking like a slam-dunk of a case for New York. What would be surprising to me would be, instead of driving the nails in the coffin of the Trump real estate empire in New York, or even reaching a generous settlement, is if New York suddenly loses its case.

History is already replete with the many incidents of Trump’s deceitful business tactics. Stuff like claiming his hotel had the biggest ballroom in New York (it didn’t) or his tower was the tallest in the world at that time (it wasn’t), or that he was selling higher floors to command higher premiums (only because he didn’t start his floor numbers with “1”) - all these showed he had a pattern for deceit, for taking advantage of gullible consumers.

His television show further boosted him as someone with cred --a mogul-- and hence, someone to be believed. Trading on that reputation, Trump inflated not just his ego, but his real estate empire. Unfortunately, somewhere along the way, he crossed the line.

Whereas before, he was only exaggerating, or fluffing, or hyping, as one is wont to do when advertising products, Trump began to actively deceive and extract value on the basis of those falsities. That is the foundation of New York’s lawsuit.

Letitia James says Trump represented to lenders that his apartment, a three-story penthouse, was 30,000 square feet, instead of only 10,000 plus, and then using his apartment as security (something like a mortgage), obtained a loan on that basis. Trump valued the apartment at $327 million --but it appears to be a fact that no apartment in New York City has ever sold for that amount.

His Florida estate, the now famous Mar-a-Lago club, was self-estimated to be $739 million, but James says it is worth only $75 million, or practically a tenth of the figure (note that with just these two properties, Trump has suddenly elevated himself to billionaire status). His golf club in Florida was purchased for $5 million, and yet a year later, appeared in his financial statements already valued at $62 million!

These practices allowed Trump to dupe banks and insurance companies. It allowed him to benefit from lower interest rates on loans that aren’t extended to normal people for being higher credit risks. It allowed him to request for lower premiums from insurance companies. Life is so much easier for the ultra-rich indeed.

Perhaps Trump showed his cards when he claimed, in another lawsuit he is facing (the classified documents case brought against him by the Federal Bureau of Investigation), that he could declassify documents just by thinking it. Does he also believe he can jack up real estate prices just by thinking it so?

This wasn’t a successful real estate mogul at all. This was a con man, and the con has been exposed. We await the finale with popcorn.