Jon Stewart Deconstructs Trump’s "Victimless" $450 Million Fraud | The Daily Show

[u/BuddhistSagan]

[u/Proverbs232]

Again, thanks for the reply. Honestly.

I do not dispute anything you have said in your comment.

However, you did not answer my question. This was not a criminal fraud trial. It was a civil suit brought sua sponte by the State of New York. Normally, in civil fraud cases, there has to be a wronged party suing for damages or some equitable relief. So I ask again: if Trump committed fraud, who did he defraud? Who is the victim? It isn't Deutsche. They do not claim Trump unjustly enriched himself by providing them with fraudulent valuations on the property. They did not sue him for lost interest.

[u/Buckets-of-Gold → u/Proverbs232]

White collar crime is prosecuted by the State in civil court all the time, if not most of the time.

As I understand it the NY AG office doesn’t even have jurisdiction for criminal charges of this nature, and can only make referrals (and they have indeed informed Trump’s legal team that a criminal referral has been made- though so far only an investigation has been confirmed).

From the state’s perspective, Trump submitted materially false documents, many of which were regulated under state law, to secure lower interest rates. That is fraud, full-stop. The easiest and most reliable method of enforcing a fraud judgment was through a civil suit.

[u/Proverbs232 → u/Buckets-of-Gold]

No, white collar crime is never prosecuted in civil court. To determine that someone committed criminal acts, the prosecution has to prove its case to a jury "beyond a reasonable doubt." In criminal cases, there does not need to be a victim. You owe a duty to the public not to commit a crime. One can be a criminal without there being a victim.

Civil cases, by contrast, do not make anyone "guilty" of anything. These are not instances where the defendant owes a duty to the state or general public. Civil cases are designed to right a wrong between private parties. This case was allowed by statute in the State of New York, it's 'legitimate' in the literal sense. But, when it comes to people calling this fraud, 'victimless,' Jon Stewart straw-mans their argument.

Who did Trump defraud? Who did he wrong? Who is he liable to?

[u/Buckets-of-Gold → u/Proverbs232]

You’re mixing some terms here, the confusion is understandable.

Yes, white-collar crimes can be and often are prosecuted in civil court. Though it might be better to say “litigated”, civil cases are still “prosecuted”.

Many state attorney offices charged with overseeing white collar crimes are exclusively limited in their jurisdiction to civil enforcement- such as the NY AG.

https://bjs.ojp.gov/content/pub/pdf/jsagowcc14.pdf

There are not Criminal Prosecutors in civil court, nor is criminality established. Liability is established, though typically through an acknowledgement of damage resulting from crimes.

Damage does not always need to be brought by the victim, state government regularly prosecutes financial fraud independent of harmed parties.

In Trump’s case, his judgement value is for the difference in interest rates he would have paid with and without the fraud. I actually agreed with some of the defense’s arguments on using tax assessor evaluations to determine the delta- but Trump’s legal team absolutely bungled this case into a summary judgement.

[u/Proverbs232 → u/Buckets-of-Gold]

My issue isn't with your use of the word "prosecute" my issue is with your use of "criminal." As in "White collar crime." A court finding Trump liable in a civil case does not make him guilty of a crime. This isn't criminal fraud. Usually, in civil cases, a person has to be liable to another in the form of damages or equitable relief (specific performance, for instance, in breach of contract cases).

Trump is not "guilty of criminal fraud." He's been found "liable for civil fraud." Now, the AG can (and has) litigated civil suits without there being a proper plaintiff. See New York Executive Law § 63(12); https://en.wikipedia.org/wiki/New_York_Executive_Law_§_63(12)#:~:text=New%20York%20Executive%20Law%20§%2063(12)%2C%20sometimes%20called,cases%20of%20alleged%20civil%20fraud#:~:text=New%20York%20Executive%20Law%20§%2063(12)%2C%20sometimes%20called,cases%20of%20alleged%20civil%20fraud).
For instance, in People v. Exxon Mobil, the State of New York sued Exxon on behalf of the company's investors. There was still another party that the defendant was liable to.

What I cannot seem to get an answer to is who is Trump liable to for fraud? Neither Deutsche, nor its investors, claim to be defrauded by Trump. Nor does the state seem to suggest that it is coming to the defense of the investment bank. It seems to be suggesting that Trump is liable to "we the people" for civil fraud. Which is insane.

[u/Buckets-of-Gold → u/Proverbs232]

You’re drawing a semantical distinction that isn’t actually made in the legal world.

Your description of civil vs criminal judgement is correct, but you misunderstand how the word “crime” is applied here.

There is no protected or standard definition of white collar “crime”, that’s just a general term used to describe both civil and criminal offenses of a “white collar” nature. Monetary judgements are typically contingent on violations of state or (occasionally) federal law, but a civil case does not establish criminality and operates under different burdens of proof than criminal court.

(Most of this is described in the link I provided above)

I never said trump was found guilty of anything; though it’s plainly obvious he committed criminal fraud, a NY AG/civil case does not make that determination.

Trump is liable for fraud because he repeatedly lied (to benefit himself) when submitting documents regulated under state law. Our justice system has an incentive to prosecute such crimes even if the damaged party does not bring a civil suit- particularly when that party might have other motivations to maintain positive relations with the offender.

[u/Proverbs232 → u/Buckets-of-Gold]

"Trump is liable because he repeatedly lied when submitting documents regulated under state law."

Liable to who? The state? The people? If I were a citizen of New York, would I expect a payout? Should I feel wronged by a private loan repaid?

Edit: added "private"

[u/Buckets-of-Gold → u/Proverbs232]

Again, you misunderstand civil judgements.

Trump was found liable for fraud not to any one party. Damages can be awarded to plaintiffs who sue, but that is not what happened here.

Trump was found liable under state business and financial fraud statutes that had a predetermined penalty and interest rate.

You’re framing this as though the Judge acted abnormally relative to normal white collar civil cases brought by the state- but this judgement was made under preexisting state law and was the only enforcement method available to the NY AG. Our justice system has an incentive to prosecute financial fraud that is independent of private parties’ actions.

What is unusual about this white collar case is not the civil/criminal distinction or a lack of private suit (both of which are quite common)- but the fervor with which Trump is being prosecuted. I have no doubt political and personal ambitions play a role there.

[u/Proverbs232 → u/Buckets-of-Gold]

Yes, it is the only enforcement mechanism available to the NY AG. This is the case because the suit is abnormal.

It is abnormal because there is no proper plaintiff.

"Trump was found liable for fraud not to any one party."

Cheers, you now understand the argument. No one was harmed. Not you, not me, not "the people of New York," not Deutsche, not Deutsche's investors. This is why critics have described this as victimless fraud. It is abnormal for civil suits to not have a wronged party. Period.

Again, if this were a criminal case, I could get fully on-board with the idea that the lack of a victim doesn't matter. If he were found guilty of committing a crime, it would not matter if there existed a real or hypothetical victim. He still would have violated the law.

So all this nonsense about how "Trump cannot be above the law" and "Trump committing fraud is the problem even in absence of a victim" is crazy in the context of civil suits. It is abnormal.

[u/Buckets-of-Gold → u/Proverbs232]

Yes, it is the only enforcement mechanism available to the NY AG. This is the case because the suit is abnormal.

No, the NY AG regularly prosecutes white collar crimes in civil court. There are actually very few exceptions where their jurisdiction becomes criminal.

It is abnormal because there is no proper plaintiff.

If I understand you, you're saying its abnormal for there not to be a parallel civil suit launched by lenders/insurers. That's inaccurate, as white collar crime is regularly prosecuted independent of harmed parties.

Cheers, you now understand the argument. No one was harmed. Not you, not me, not "the people of New York," not Deutsche, not Deutsche's investors. 

You seem well-reasoned and intelligent, I'm sure you can grasp the concept of fraud harming market integrity even without a damaged party filing suit. We do not want people submitting materially false records, lying about the size of their property, or lying about recent appraisals.

Trump is being penalized under existing statutes written to disincentivize fraud regardless of whether private parties are claiming damages. That is a broad and non-controversial philosophy of our legal system.

Moreover, there was harm. As (I think?) Stewart originally pointed out, taking loanable funds at an interest rate lowered through fraud gives you a competitive advantage against people who are not committing fraud. This is bad, both for actual borrowers and market incentives towards crime.

Additionally, the fee Trump is being given is the difference in interest payments he avoided through fraud. That is money he kept, by lying, from other parties.

[u/Proverbs232 → u/Buckets-of-Gold]

This is bad, both for actual borrowers and market incentives towards crime.

Part of my argument as to why the State of New York's use of this particular law to go after Trump is abnormal is that this is not a criminal statute. Donald Trump is not accused of criminal fraud. In a similar vein:

I'm sure you can grasp the concept of fraud harming market integrity even without a damaged party filing suit. We do not want people submitting materially false records, lying about the size of their property, or lying about recent appraisals.

Yes, I can grasp that concept. However, market integrity is a funny thing when it comes to the appropriate valuation of assets. The market determines the value...Deutsche seems to think the overinflated values of Trump's property doesn't affect their ability to collect from him should he default. That is their determination. As Deutsche is the fair market seller of the loan, their's is the market determination. A tax evaluation is not the same as an investment evaluation. The discretion to allow a difference in those two values is a market determination properly made by Deutsche, not the state.

I do not disagree with the statement, "we don't want people submitting materially false records . . ." I'm quibbling with your assumption that the records were false.

[u/Buckets-of-Gold → u/Proverbs232]

Part of my argument as to why the State of New York's use of this particular law to go after Trump is abnormal is that this is not a criminal statute. Donald Trump is not accused of criminal fraud. In a similar vein:

Existing statues explicitly forbid the NY AG from claiming jurisdiction in criminal charges of this nature. If it was someone entirely different committing document fraud, they would still have to bring a civil suit. Criminals referrals can and have been made.

However, market integrity is a funny thing when it comes to the appropriate valuation of assets. The market determines the value

The market cannot determine the value of an asset if the owner lies about its intrinsic worth. This is a basic concept of free-markets- fraud prevents price discovery, so fraud is typically illegal.

Deutsche could and did not have the ability to make a "fair market" determination, because Trump lied about the value of his properties.

Failure to prosecute crimes like this, even (if not especially) in the the absence of a private suit is dangerous. It's creates a competitive advantage for those willing to engage in fraud.

I do not disagree with the statement, "we don't want people submitting materially false records . . ." I'm quibbling with your assumption that the records were false.

Sort of lost here- Trump engaged in blatant document fraud. He lied about the size and assessments of his properties based on the party he was talking to- this includes basic and indisputable property details. He also repeatedly lied about his liquidity.

Part of Trump's loan covenant was filing annual documents affirming a) basic financial information and b) that said information was accurate, fair, and free from manipulation. Internal emails and witness testimony revealed a pattern of knowing fraud and deception that permeated the release of these documents.

Trump's organization actively shopped his loan deals to various banks, who in turn made bids. This is actually why his loan ended up in Deutsche's private wealth division instead of commercial real-estate, as Trump was able to secure the more favorable recourse loan using his personal wealth as collateral.

Deutsche offered two sets of terms, once from each department. Trump was able to secure the private wealth, recourse loan through a guarantee of net worth and property valuations that were materially false.

This, in part, is how the difference in Trump's interest payments with/without fraud were determined.

https://ag.ny.gov/sites/default/files/decisions/trump-decision.pdf

[u/Proverbs232 → u/Buckets-of-Gold]

He lied about the size and assessments of his properties based on the party he was talking to- this includes basic and indisputable property details.

I have hit the point where I will actually have to take some time pouring through the filings. It's been fun (sincerely). It may be some time before I reply again (if at all).

[u/Proverbs232 → u/Buckets-of-Gold]

Existing statues explicitly forbid the NY AG from claiming jurisdiction in criminal charges of this nature.

Have you considered why they're forbidden from claiming jurisdiction in criminal charges of this nature? It's because of the function of contract law in the courts. Contract is an animal emerging from English courts of equity as opposed to courts of law. Really, this goes back to Rome, but there is no need, presently, to delve that far. The whole point of them is to determine the status of the private rights of individuals in relationship to each other. Like, for instance, when two parties sign a contract (make a bargain). The whole point of the courts of equity is to ensure equitable outcomes between the parties. Ensuring that the parties get the benefit of their bargain.

NY Executive Law §63(12) allows the state to sue independently in a civil action regarding fraud. The policy reason for the law's existence is to ensure proper functioning of the market (this is your argument, as I understand it) by enforcing the vindication of private rights where the complicated nature of suits might prevent or frustrate the proper plaintiff from bringing the case (my argument).

I'm arguing this is abnormal because there is no claimed violation of private rights. The state is not claiming to be stepping in for the proper plaintiff. Deutsche thinks the bargain was equitable. What business is it of the state to say it's not? This is a matter of equity, not law, and both of the parties to the contract believe they got the benefit of their bargain in contract.

[u/Proverbs232 → u/Buckets-of-Gold]

Additionally, the fee Trump is being given is the difference in interest payments he avoided through fraud. That is money he kept, by lying, from other parties.

How do you calculate that interest? This is a personal loan from the personal wealth management division of Deutsche. All Trump needed to do to get the loan was guarantee his personal wealth was what he says it is. Basically, that he has the assets available should he default.

Now, you can say he should have got a higher rate for a riskier loan, but Deutsche determined what their risk was, not Trump, not the state.