Judge Arthur Engoron recently slammed the former President Donald Trump’s demand for a directed verdict dismissing his fraud case with a blistering order that left Trump’s expert witness a heap of glowing ash and embers via Mediaite.
It has been noted that the trial in the fraud case brought by New York Attorney General Letitia James and presided over by Judge Engoron is hurtling toward its conclusion, with closing arguments set for January 11, 2024.
But on Monday, Judge Engoron foreshadowed the ending with a blistering ruling on a longshot motion to dismiss the case via a directed verdict.
Engoron impatiently introduced his order by noting that Trump has made “at least five” of these motions and said rather than getting into all the details of the arguments and counter-arguments, “this court will highlight some of the fatal flaws” in the motion.
He began by absolutely wrecking expert witness and million-dollar-man Professor Eli Bartov:
The most glaring flaw is to assume that the testimony of defendants’ experts, notably Messrs. Jason Flemmons and Eli Bartov, is true and accurate, or at least that the Court, as the trier of fact, will accept it as true and accurate. Bartov is a tenured professor, but all that his testimony proves is that for a million or so dollars, some experts will say whatever you want them to say. His overarching point was that the subject statements of financial condition were accurate in every respect. As this Court discussed in excruciating detail in its September 26, 2023 summary judgment decision, the Statements of Financial Condition (“SFCs”) contained numerous obvious errors. By doggedly attempting to justify every misstatement, Professor Bartov lost all credibility.
Engoron mocked another of Trump’s arguments as an attempt to create a “get-out-of-jail-free card”:
Defendants persist in arguing that if a loan closes prior to the period during which the statute of limitations allows suit, than any required follow-up SFCs made during that period is somehow sacrosanct. That contention is belied by a plain reading of Executive Law Section § 63(12), by the law of the case doctrine, and, perhaps most importantly, by common sense. Closing is not a get-out-of-jail-free card for future misstatements. All that § 63(12) requires is a false statement used in business; the subject financial statements fit that definition “to a T.”
The judge torched arguments about the AG’s standing by saying they “personify frivolity” and then attacked Trump’s claim that there was no injury to the lenders:
If you pay a lower interest rate on a loan by overstating the value of any of your assets, thus lowering the perceived risk to the lender, your gains are ill-gotten. The lender has lost money, although the loss is not out-of-pocket, and so the loss is not what the law traditionally thinks of as damages. That the instant lenders made millions of dollars and were happy with the transactions does not mean that they were not damaged by lending at lower interest rates than they otherwise would have.
Judge Engoron then pulled apart “two of [Team Trump’s] standard canards” like so much monkey bread, concluding that despite their excuses, “a lie is still a lie”:.
Defendants also trot out two of their standard canards, that valuations are subjective and that the law only penalizes “material” deviations. These both fall into the category of “Let no one be fooled.”
Valuations, as elucidated ad museum in this trial, can be based on different criteria analyzed in different ways. But a lie is still a lie.
Valuing occupied residences as if vacant, valuing restricted land as if unrestricted, valuing an apartment as if it were triple its actual size, valuing property many times the amount of concealed appraisals, valuing planned buildings as if completed and ready to rent, valuing golf courses with brand premium while claiming not to, and valuing restricted funds as cash, are not subjective differences of opinion, they are misstatements at best and fraud at worst.
Defendants are correct that discrepancies in amounts must be material to be actionable. However, the evidence in the record is replete with examples of material misstatements: the size of the triplex, the discrepancies between the appraised values and the amounts on the SFCs, the discrepancy in value between restricted property and unrestricted property, the undisclosed addition of brand value, the amount of “cash” that was illiquid, future value listed as present value without discounting to current value, etc.
Trump’s oft-repeated talking point about “disclaimers” was the final pin to be knocked down, as Judge Engoron explained the statements were actually the opposite of disclaimers:
Finally, defendants attempt to fall back on alleged disclaimers in the SFCs. As analyzed in the September 26, 2023 decision, the words at issue were simply Mazars’ practice of ensuring that the issuer was responsible for the accuracy of the statements. They are not disclaimers at all, they are not defendants’ statements, and they certainly do not shield defendants from liability; if anything, they expose defendants to liability.
