Trump Org could make history with civil fraud fate

When Judge Arthur Engoron comes to a decision in the coming days in the bench trial of Donald Trump, his ruling on the former president could set precedent.

In a September order that’s being appealed, Engoron ordered the “dissolution” of Trump’s companies in New York. It’s not clear what that entails — the liquidation of companies that control properties or the liquidation of properties themselves are strong possibilities — but the Associated Press reported it may represent a first-of-its-kind penalty under state law. 

The penalty has been levied only a dozen times under New York’s anti-fraud law — which dates back seven decades — according to the AP’s analysis. Those rare instances practically never impacted companies that didn’t show obvious victims or major losses. 

In this case, primary lender Deutsche Bank didn’t complain or report of losses stemming from Trump’s alleged fraud.

The only company previously dissolved under the anti-fraud law without showing obvious victims bit the dust in 1972. The firm, which wrote papers for college students, was found to have harmed “the integrity of the educational process” in the eyes of the attorney general. 

Donald Trump previously ran into the anti-fraud law before agreeing to shutter the nonprofit Trump Foundation in 2018 after accusations he had misused funds for political and business interests. Trump University shuttered before it could be sued under the law, before agreeing to a $25 million settlement.

In the current case, legal experts said the most drastic possibility would see Trump stripped of real estate assets in the Empire State and beyond, including Mar-a-Lago.  

While the judge is angling for a dissolution of Trump’s businesses, the state is not, despite being the party that brought the civil fraud case against the real estate tycoon. Attorney General Letitia James is seeking a $370 million penalty and a ban on Trump doing business in the state.

“I don’t think we are looking for anything that would cause the liquidation of business,” one of the state’s lawyers said during closing arguments. 

James’ office has pitched a compromise of sorts, which would put an independent monitor in an oversight position of Trump’s businesses for five years before making a more definitive decision about the former president’s future operations in the state.

Engoron is expected to issue his ruling by Wednesday. Among the decisions up in the air are the cash penalty, the business ban and the meaning behind his “dissolution” order.

— Holden Walter-Warner

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