As you may or may not know, New York Attorney General Letitia James has filed a 600 page lawsuit against Donald Trump, his children, and others claiming that he inflated the value of his property when seeking loans on that property. Now what she is alleging here is fraud, and the reason she is bringing a civil suit against Donald Trump and not criminal charges is twofold. One, what he did is not illegal, which I’ll get to in a minute, but more importantly, even if it were, it would be nearly impossible to prove by the standards of a criminal trial. Criminal court requires proof beyond a reasonable doubt. Meaning that the evidence and testimony has to be 99.999% convincing of a criminal act. Whereas in a civil suit a preponderance of evidence is used, meaning the evidence and testimony only has to show that it is mostly, like 51% convincing that one of the parties to the suit was wronged.
Now these aren’t title loans from a strip mall. These are loans from major international banks for hundreds of millions of dollars. These banks do their own due diligence and financial analysis of the asset being used as collateral. It’s a long process and it takes months, sometimes years to complete. Donald Trump’s attorneys can subpoena that data as evidence at trial to show the banks knew what they were getting into. Moreover the overall value of the property that is arrived at isn’t based on a Zillow listing either, in most cases and especially in the case of large property holdings it is based on the improvements already in place but also potential improvements and development. The final value is very subjective and open to speculation by both parties.
So back to the original point of Trump not doing anything illegal, and where this suit will really fail, is that once a bank grants a loan on a piece of property, the two parties involved, the bank and the person requesting the loan, agree via a contract that the value of the asset is what they have agreed it to be. It would be like you buying a rusted out 1970 Ford Mustang with no engine. The seller may have sold you the car for $10k because it’s a classic car and he knows you will restore it making it even more valuable. That doesn’t mean you can go back a year later and claim that you were financially injured because he over priced a pile of rusty metal. You the purchaser and he the seller agreed on the value of the car, not the metal, based on its potential and that’s that. In this case, the banks essentially purchased the property from Donald Trump and agreed to sell it back to him for the amount of the loan plus interest.
So if Trump was able to convince a bank to give him more money than the property was worth, all that proves is that he’s a really good salesman. Letitia James really should have had someone explain contractual and real estate law to her before she did this, because now Donald Trump can countersue the both her and The State of New York for any financial damages done to his business as a result of this frivolous lawsuit.