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[Bozo_Casanova 26579]

11 minutes ago, troph said:

Personal liability and piercing the corporate veil for fraud is a thing - in every state. It’s hard to prove - though they have him here. That doesn’t mean the ability to transact business going forward is forfeited.  
 

admittedly im not following closely but the language of loss of business license to me means more and is not simply being personally liable for corporate fraud.

Is there a question in there? What’s your concern and what interest are you trying to protect?

The state grants a charter to conduct business that has a number of requirements. If it can’t be revoked for consistent abuse and fraud, and the requirements aren’t being met, what purpose does it serve? Because I am very pro-business I am not squeamish about holding business to high standards for compliance. If we don’t, we confer advantage on bad actors who poison the business climate. 

[Gatorubet 30323]

On 10/5/2023 at 11:35 AM, Pato del Muerto said:

Glorious sunset of my heart was fading. Soon the super karate monkey death car would park in my space. But Jimmy has fancy plans, and pants to match.

 I never doubted myself for a minute for I knew that my monkey-strong bowels were girded with strength, like the loins of a dragon ribboned with fat and the opulence of buffalo dung.

I see that you too have read Macho Business Donkey Wrestler by Mr. James. 

[Gatorubet 30323]

1 hour ago, BamaATL said:

I suppose the weird way I am looking at this is as follows:

1.  Let's say you robbed a liquor store 5 years ago, but weren't caught until now.

2.  In the meantime, (bare with me on this part), you invested the money you robbed in an index fund and generated a return, but you didn't file taxes from returns from your robbery investment income.  

3.  Now you get arrested for the robbery because the police happen to crack the case.  In theory, (again bare with me a bit), if they went thru and immediately were able to detect that you did this investing and subsequently had additional unreported taxable income, how does this not get charged as tax fraud (or some other tax crime) as well as robbery?

Is this not more or less the same scenario?

 

[troph 24914]

7 hours ago, Bozo_Casanova said:

Is there a question in there? What’s your concern and what interest are you trying to protect?

The state grants a charter to conduct business that has a number of requirements. If it can’t be revoked for consistent abuse and fraud, and the requirements aren’t being met, what purpose does it serve? Because I am very pro-business I am not squeamish about holding business to high standards for compliance. If we don’t, we confer advantage on bad actors who poison the business climate. 

I don’t typically ask questions in discussions, I advance positions and explain points. That’s usually because I enter by making a statement then I get someone asking me questions that I then try to answer.
 

The idea that I’m trying to protect someone here from consequences is laughable. I said there is already recourse for personal liability in a corporate context and if criminal there should be jail time. I said I am unaware of any situation where a person is no longer allowed to even conduct business - which effectively means a forfeiture of assets and future earnings AFTER damages are recovered and jail time is served. That seems very odd. 
 

now that may not be what’s at play here, I don’t have the time to look at the law and what remedy the prosecution is looking for but the media seems to be using language that suggests he will be unable to conduct business in New York at all. 

Edited October 7, 2023 by troph

[BamaATL 16593]

10 minutes ago, troph said:

I don’t typically ask questions in discussions, I advance positions and explain points. That’s usually because I enter by making a statement then I get someone asking me questions that I then try to answer.
 

The idea that I’m trying to protect someone here from consequences is laughable. I said there is already recourse for personal liability in a corporate context and if criminal there should be jail time. I said I am unaware of any situation where a person is no longer allowed to even conduct business - which effectively means a forfeiture of assets and future earnings AFTER damages are recovered and jail time is served. That seems very odd. 
 

now that may not be what’s at play here, I don’t have the time to look at the law and what remedy the prosecution is looking for but the media seems to be using language that suggests he will be unable to conduct business in New York at all. 

My understanding, and I am admittedly over my skis on this, is that the State of New York has provisions in their legal code that allow for this if its proven there is a systemic pattern of fraud.  I don't know why this is apparently different than most states.  

[troph 24914]

Permanent inability to conduct business seems over the top to me. Send him to jail if it’s that bad. But taking the ability to start over away to me goes even farther. 

Edited October 7, 2023 by troph

[AnTiM 1671]

11 minutes ago, troph said:

Permanent inability to conduct business seems over the top to me. Send him to jail if it’s that bad. But taking the ability to start over away to me goes even farther. 

Seems to me that the problem here is a person who has a permanent inability to run a business in a legal manner.  He has done it repeatedly, why let him do it again?

[troph 24914]

I think it’s an inappropriate remedy when personal liability to the tune of hundreds of millions of dollars and jail time are on the table. Our country is founded and generally operated on the idea of having the right to start over.

look I think the guy should lose his ass, I think he probably meets the standard for jail time for his fraud. But to say he can’t form an LLC to sell even just hot dogs once he’s paid the damages and served the time doesn’t seem appropriate to me. 

[BamaATL 16593]

5 minutes ago, troph said:

I think it’s an inappropriate remedy when personal liability to the tune of hundreds of millions of dollars and jail time are on the table. Our country is founded and generally operated on the idea of having the right to start over.

look I think the guy should lose his ass, I think he probably meets the standard for jail time for his fraud. But to say he can’t form an LLC to sell even just hot dogs once he’s paid the damages and served the time doesn’t seem appropriate to me. 

I don't think it's permanent but 5 years, if I heard it right listening to Legal AF.  

The other part I don't understand is why the IRS hasn't gotten involved.  Illicit income is nonetheless income, which is exactly how they got Al Capone.  

[troph 24914]

12 minutes ago, BamaATL said:

I don't think it's permanent but 5 years, if I heard it right listening to Legal AF.  

The other part I don't understand is why the IRS hasn't gotten involved.  Illicit income is nonetheless income, which is exactly how they got Al Capone.  

That’s better. I can still see that as problematic if damages are paid and jail time is served. 
 

I wouldn’t know about the IRS but the more state level prosecution we have the less chance for bullshit pardons and accusations that Biden is using the federal government to go after him.  Plus Capone was caught on tax evasion because nothing else would stick, trump is in deep doo doo in GA and NY, at a minimum. He might be toast in FL too.

Edited October 7, 2023 by troph

[Restless Native 315]

Dumb question alert: He could still do business in 49 other states, and the rest of the world, right?

[Neonmoon 38130]

23 minutes ago, Restless Native said:

Dumb question alert: He could still do business in 49 other states, and the rest of the world, right?

Correct 

[Bozo_Casanova 26579]

2 hours ago, troph said:

I don’t typically ask questions in discussions, I advance positions and explain points. That’s usually because I enter by making a statement then I get someone asking me questions that I then try to answer.

I'm aware of that, but it was confusing because it was done in response and the point wasn't clear. 

2 hours ago, troph said:

The idea that I’m trying to protect someone here from consequences is laughable. I said there is already recourse for personal liability in a corporate context and if criminal there should be jail time. I said I am unaware of any situation where a person is no longer allowed to even conduct business - which effectively means a forfeiture of assets and future earnings AFTER damages are recovered and jail time is served. That seems very odd. 

It happens. In finance, for example, it is not uncommon for fraudsters and bad actors to be barred or disqualified from conducting business. Enforcement actions happen, at both the state and federal level. 

FWIW, I think you are conflating two things:
1) The personal liability of the decision makers and 
2) The conduct of the corporate entity. 
I'm saying there should be consequences for both.  and to the extent that the former has a pattern of abusing the creation and management of the latter, they should also be prevented from doing it again. 

1 hour ago, troph said:

Permanent inability to conduct business seems over the top to me. Send him to jail if it’s that bad. But taking the ability to start over away to me goes even farther. 

But start over at what? "Doing business" speaks to operating, not working. Nobody is prevented from getting a job at the movie theater, or endorsing products or hosting infomercials etc. 
 

Edited October 7, 2023 by Bozo_Casanova

[troph 24914]

I’m not conflating the loss of a FINRA or SEC license, law license or plumbing license with the right to file to form an LLC. I couldn’t get a job now if I wanted to. For a solid segment of the population forming an LLC to sell something is the same as getting a job. 

a corporate entity can be liable.

the person can be civilly liable.

the person can be criminally liable and go to jail.

I still don’t think the basic opportunity to form an LLC should be taken away.  
 

we disagree, that’s pretty much it. 

Edited October 7, 2023 by troph

[Bozo_Casanova 26579]

30 minutes ago, troph said:

I’m not conflating the loss of a FINRA or SEC license, law license or plumbing license with the right to file to form an LLC. I couldn’t get a job now if I wanted to. For a solid segment of the population forming an LLC to sell something is the same as getting a job. 
-------
I still don’t think the basic opportunity to form an LLC should be taken away.  

we disagree, that’s pretty much it. 

"The right?" 

indeed we do. Because not only do I think the state-granted privilege of forming a limited liability corporation should be taken away as a punishment for abuse, I think the bar should be lower to take it away and it should happen more often. It's a legal fiction, not a fundamental human right. 

Edited October 7, 2023 by Bozo_Casanova

[troph 24914]

15 minutes ago, Bozo_Casanova said:

"The right?" 

indeed we do. Because not only do I think the state-granted privilege of forming a limited liability corporation should be taken away as a punishment for abuse, I think the bar should be lower to take it away and it should happen more often. It's a legal fiction, not a fundamental human right. 

You aren’t going to convince me that after hundreds of millions in damages and criminal liability/imprisonment that a man should be barred from simply forming an LLC to make a living when the same rules (civil liability and criminal liability) apply. 

[safe sex 11794]

I would be fine with him still being able to run a business as long as the same restrictions are in place for how he has to run "charities" (as if he ever would again lmao)

[Macanudo 13018]

Back to the harm question...   If he consistently undervalued properties for tax purposes then the State of NY and NYC were harmed by not being able to collect taxes at the reasonable and fair amounts that should have been due.

Some times lawyers just want to argue for the fucking sake of arguing.  

[Bozo_Casanova 26579]

19 minutes ago, troph said:

You aren’t going to convince me that after hundreds of millions in damages and criminal liability/imprisonment that a man should be barred from simply forming an LLC to make a living when the same rules (civil liability and criminal liability) apply. 

You don't have to form an LLC to make a living. Let's imagine a commercial truck driver repeatedly drives drunk, overloads their semi, and has had a number of accidents that injure or kill people and damage property. That driver is sued, charged, loses their home and ends up doing time. 

Should the state grant them the privilege of a commercial driver's license after all that? Almost certainly not. And would that deprive them of the ability to start over or make a living in some way? Of course not. 
And for what it's worth, a bad actor can do a lot more damage with an LLC than a CDL.

Edited October 7, 2023 by Bozo_Casanova

[Captainant 27832]

3 hours ago, troph said:

Our country is founded and generally operated on the idea of having the right to start over.

Being seventy fucking eight sort of eliminates his ability to "start over". Not sure why you're so gung ho over protecting a fraudsters ability to defraud people

[troph 24914]

8 minutes ago, Captainant said:

Being seventy fucking eight sort of eliminates his ability to "start over". Not sure why you're so gung ho over protecting a fraudsters ability to defraud people

Great let’s codify that. You’re old, fuck you. 

39 minutes ago, Bozo_Casanova said:

You don't have to form an LLC to make a living. Let's imagine a commercial truck driver repeatedly drives drunk, overloads their semi, and has had a number of accidents that injure or kill people and damage property. That driver is sued, charged, loses their home and ends up doing time. 

Should the state grant them the privilege of a commercial driver's license after all that? Almost certainly not. And would that deprive them of the ability to start over or make a living in some way? Of course not. 
And for what it's worth, a bad actor can do a lot more damage with an LLC than a CDL.

Again not the same. CDL is more like my law license. 

[Captainant 27832]

3 minutes ago, troph said:

Great let’s codify that. You’re old, fuck you. 

Lol you're missing my point. You're tossing out this false concern of "losing his ability to start over" and it's just completely farcical. You can survive without without the ability to crease an LLC in a single state. 

[troph 24914]

Just now, Captainant said:

Lol you're missing my point. You're tossing out this false concern of "losing his ability to start over" and it's just completely farcical. You can survive without without the ability to crease an LLC in a single state. 

I’m not. I disagree with you and bozo and I can’t disagree more. I’ve stated my reasons. And both of you bring silly emotional arguments that aren’t compelling to me.

[Captainant 27832]

14 minutes ago, troph said:

I’m not. I disagree with you and bozo and I can’t disagree more. I’ve stated my reasons. And both of you bring silly emotional arguments that aren’t compelling to me.

You've got terminal businessbrain if you think an American can't survive without the ability create an LLC in the state of NY

Edited October 7, 2023 by Captainant

[troph 24914]

Just now, Captainant said:

You've got terminal businessbrain if you think an American can't survive without creating an LLC

You win. You’re right. I’m wrong. Carry on. 

[tx 3 putt 77548]

At what point does the irs begin to take notice ?

[Js1 85605]

1 minute ago, tx 3 putt said:

At what point does the irs begin to take notice ?

That’s why they want it defunded 

[Bozo_Casanova 26579]

2 hours ago, troph said:

I’m not. I disagree with you and bozo and I can’t disagree more. I’ve stated my reasons. And both of you bring silly emotional arguments that aren’t compelling to me.

The idea that forming an LLC is a privilege that one can and should lose is not an emotional argument. You may disagree, but it’s not. Also you haven’t stated the reasons why you think otherwise.  Come on, Troph. 

[Bozo_Casanova 26579]

2 hours ago, Captainant said:

You've got terminal businessbrain if you think an American can't survive without the ability create an LLC in the state of NY

Wrong. That is not businessbrain. Every businessperson on earth understands otherwise.

[Leeroy Jenkins 2415]

Nvm. Wrong thread

Edited October 7, 2023 by Leeroy Jenkins

[TwiceHorn 31570]

On 10/6/2023 at 9:17 PM, Neonmoon said:

No one was harmed? Fuck yes, as long as I find a lender willing to play ball, I can say my home is worth 2 million, get a bigger cash out refinance to buy a couple lesser valued homes with cash and have their rental income pay the large mortgage payment. Repeat that a few times, and viola, I’m a real estate mogul. 

And, as long as you pay the loans back on time, who is harmed?

The risk in bank fraud is that the bank gives a loan that can't be paid back and will be undercollateralized in that event.

There's also a smaller harm in that perhaps they give a better interest rate, and so lose out on the differential.  That would be damn near impossible to quantify.

The fact is, I don't really believe these lending institutions and insurers were defrauded and if James had had to prove reliance on the financial statements, she would not have been able to win.  She actually had to make the point that reliance and intention/scienter were not elements of her proof on several occasions.

As to the property tax authorities, they've been free to try to use these statements to raise his tax burden at any time.  That's not really convincing.

[TwiceHorn 31570]

On 10/7/2023 at 11:23 AM, troph said:

I’m not. I disagree with you and bozo and I can’t disagree more. I’ve stated my reasons. And both of you bring silly emotional arguments that aren’t compelling to me.

I'm not sure whether I agree or disagree.  But it's not just form an LLC or corporation in NY, it's to do business at all in New York.  The asshole has a lot of properties there and, depending on how this shakes out, could be a forced divestiture of those properties.  And that, you have to admit, is an extreme remedy.

I'd love to see it, but I'm not sure it's legally justifiable.

If he had perpetrated massive traditional fraud, causing the usual losses of investment/lent money, on private businesses and public entities, that would be one thing.  But that has not been proven.

[TwiceHorn 31570]

On 10/6/2023 at 9:34 PM, Bozo_Casanova said:

This kind of thing is where lawyers (and political reporters, and doctors) show how dangerous it is for them to play the role they do in society with so little understanding of how the world outside their profession operates. Like I don’t even know where to begin with this “nobody was harmed” bullshit. 

Itemize for me, please, the financial losses incurred by these transactions.  

I think anyone with half a legal brain would admit that cancellation of business "licenses" is the most extreme remedy under this statute and punitive.

That would tend to mean that the violation of the statute would tend to be of the most egregious sort, causing the most egregious harm to private and especially public interests.  Think Bernie Madoff, Allen Stanford, hell, Bankman-Fried.

Whether you can conjure some theoretical harm pretty much takes it out of the foregoing.  The unfortunate fact is that the banks have gotten paid.  No one has incurred the type of losses usually associated with the most egregious fraud.

Edited October 10, 2023 by TwiceHorn

[DigglerontheHoof 21257]

18 minutes ago, TwiceHorn said:

And, as long as you pay the loans back on time, who is harmed?

The risk in bank fraud is that the bank gives a loan that can't be paid back and will be undercollateralized in that event.

There's also a smaller harm in that perhaps they give a better interest rate, and so lose out on the differential.  That would be damn near impossible to quantify.

The fact is, I don't really believe these lending institutions and insurers were defrauded and if James had had to prove reliance on the financial statements, she would not have been able to win.  She actually had to make the point that reliance and intention/scienter were not elements of her proof on several occasions.

As to the property tax authorities, they've been free to try to use these statements to raise his tax burden at any time.  That's not really convincing.

So basically, businessmen should strive to be like trump, b/c, there aren't any consequences in American law to punish you for fraud.  If I tried to overvalue my property exponentially on a loan application, I wonder how it would work out for me. 

I get that you're just explaining the law to us.  But, fuck, the more I learn about the law the more I'm not sure what the fuck we're actually trying to protect ourselves from trump for.  We're already a broken system.  Why not cut out the middleman and just have a dictator instead of an oligarchy? 

[TwiceHorn 31570]

On 10/7/2023 at 7:26 AM, BamaATL said:

My understanding, and I am admittedly over my skis on this, is that the State of New York has provisions in their legal code that allow for this if its proven there is a systemic pattern of fraud.  I don't know why this is apparently different than most states.  

Let's get something super-clear here.

Yes, most states can judicially dissolve corporations, to include LLCs, for fraudulent or other business-related misconduct.  That generally would be proven in private-party lawsuits or criminal proceedings brought by the government.

What is different here is that Executive Law 63(12) empowers the NY AG to bring a suit on behalf of the public to halt fraudulent conduct and obtain certain remedies for it.  

But as I have said many times, the fraud that can be proven under 63(12) is not traditional fraud that requires:

• a knowing false statement (made with the intention that the party to whom its made relies on the statement)
• about something material to the transaction with the relying party
• justifiable reliance by the party to whom the false statement is made (that means sophisticated parties can't just ignore what they know is utter bullshit)
• where the reliance results in financial loss or harm to the relying party

It has been made clear in these proceedings that 63(12) does not require the last two elements of common-law civil fraud, or, for that matter the parenthetical intention of the first one.

That is rather unusual.  

In the case of 63(12), it's simply the use of fraudulent statements or documents in business transactions, whether anyone relies on them or not and whether any relying party is actually harmed or not.

It is true that most bank/mortgage fraud criminal statutes do not require either reliance by the recipient or any actual loss, but that's criminal statutes, not civil.

[wildcat09 29425]

6 minutes ago, longhornmatt said:

I agree there isn't really harm to the banks if they were repaid, and also that you couldn't really show reliance most likely.  Deutsche Bank doesn't do their own appraisal of collateral and just trusts their serially bankrupt borrower's bluster about how much he's worth?  Uh, no.   I remember seeing headlines about Binance or whatever sketchy crypto fraud lender giving Elon Musk money without any due diligence, but that isn't happening on Wall Street in a real estate deal unless someone at the bank is going rogue.

However, if you want to play devil's advocate supporting the NY law on this, it's not that hard to paint it as a more broad harm to the community.   If some jackwagon like Trump gets the financing just because he has the balls to fraudulently ask for it, then you get properties owned by jackwagon Trump instead of legit developers who otherwise would have acquired them had Trump not had access to capital he never should have had.  Tenants aren't treated as well, the properties aren't developed as well, it doesn't grow the overall economy as much (or at all, because he stiffs everyone except the bank), etc.  Capital isn't allocated to the best businesses, but instead to the fraudster who does his usual shoddy job.  Even if the bank gets paid back, it's not how things are supposed to work.

Yeah, it's not hard to understand that the harm is systemic. Lenders knowingly aiding and abetting their borrower's fraud to skirt regulations obviously increases systemic risk in the financial system.  Any one instance you can easily rationalize away as not being a big deal but when you enable a culture of rampant fraud 2008 is what happens.

[wildcat09 29425]

3 minutes ago, TwiceHorn said:

Let's get something super-clear here.

Yes, most states can judicially dissolve corporations, to include LLCs, for fraudulent or other business-related misconduct.  That generally would be proven in private-party lawsuits or criminal proceedings brought by the government.

What is different here is that Executive Law 63(12) empowers the NY AG to bring a suit on behalf of the public to halt fraudulent conduct and obtain certain remedies for it.  

But as I have said many times, the fraud that can be proven under 63(12) is not traditional fraud that requires:

• a knowing false statement (made with the intention that the party to whom its made relies on the statement)
• about something material to the transaction with the relying party
• justifiable reliance by the party to whom the false statement is made (that means sophisticated parties can't just ignore what they know is utter bullshit)
• where the reliance results in financial loss or harm to the relying party

It has been made clear in these proceedings that 63(12) does not require the last two elements of common-law civil fraud, or, for that matter the parenthetical intention of the first one.

That is rather unusual.  

In the case of 63(12), it's simply the use of fraudulent statements or documents in business transactions, whether anyone relies on them or not and whether any relying party is actually harmed or not.

It is true that most bank/mortgage fraud criminal statutes do not require either reliance by the recipient or any actual loss, but that's criminal statutes, not civil.

The state of New York has a good reason to adopt more remedies than other states, including civil remedies, given that an enormous amount of all of the world's financial transactions take place within its jurisdiction.  

Few people in Wyoming give a fuck about maintaining the stability of our national and global financial systems. A whole lot of people in New York do.

[TwiceHorn 31570]

6 minutes ago, DigglerontheHoof said:

So basically, businessmen should strive to be like trump, b/c, there aren't any consequences in American law to punish you for fraud.  If I tried to overvalue my property exponentially on a loan application, I wonder how it would work out for me. 

I get that you're just explaining the law to us.  But, fuck, the more I learn about the law the more I'm not sure what the fuck we're actually trying to protect ourselves from trump for.  We're already a broken system.  Why not cut out the middleman and just have a dictator instead of an oligarchy? 

Well, certainly in a residential loan transaction, you'd probably be indicted for bank fraud by the feds.  Me too.  Most of us here.

Trump probably should have, but that's water under the bridge.

This is a civil case with civil remedies.  The question here is not whether he's going to be "punished" (civil cases usually aren't about punishment but compensation), but to what extent and with what particular remedies.

One of the other remedies provided by 63(12) is disgorgement of gains as a result of the fraudulent conduct.  That doesn't require anyone to be financially harmed, it just recognizes that you got something from fraudulent conduct and should cough it up.  That's where the $250 million comes from, and I assume that is the proceeds of the loans where he employed the fraudulent statements.

[Bozo_Casanova 26579]

29 minutes ago, TwiceHorn said:

Itemize for me, please, the financial losses incurred by these transactions.  

I think anyone with half a legal brain would admit that cancellation of business "licenses" is the most extreme remedy under this statute and punitive.

That would tend to mean that the violation of the statute would tend to be of the most egregious sort, causing the most egregious harm to private and especially public interests.  Think Bernie Madoff, Allen Stanford, hell, Bankman-Fried.

Whether you can conjure some theoretical harm pretty much takes it out of the foregoing.  The unfortunate fact is that the banks have gotten paid.  No one has incurred the type of losses usually associated with the most egregious fraud.

@TwiceHorn, no offense, but you're out of your depth on this one (the business question, not the legal questions where I'm the lay person and you are the expert). The lenders and insurers were harmed because they assumed risk at a contactual price that was fraudulently set. Their harm is the delta between what they charged and what they would have charged, if in fact loans, credit and coverage would have been offered at all.  There's also reputational damage and loss of goodwill. That's real harm.  If a loan originator lies about my income, my assets and my credit score and then sells or securitizes that debt, they are defrauding and harming the party that funds the loan irrespective of whether the loan gets paid back, because the price is wrong and offered under false pretenses. 

And I agree that it's the most extreme remedy. It's a corporate death penalty reserved for the worst, most incorrigible bad actors. Which, according to the judge and most sentient beings, the Trump Organization is, despite the excellent deconstructed burger at the Doral. 

here's the ruling, which quotes the law as follows:

I don't see anything there about whether loans get paid back or not. 

 

Edited October 10, 2023 by Bozo_Casanova

[Satchel 6949]

If I stole 100 dollars out of the bank till, used it to make 1000 at the track and later put the 100 back in the till, didn’t I profit from a crime? And isn’t that the argument being made by NY state?

[TwiceHorn 31570]

1 minute ago, wildcat09 said:

The state of New York has a good reason to adopt more remedies than other states, including civil remedies, given that an enormous amount of all of the world's financial transactions take place within its jurisdiction.  

Few people in Wyoming give a fuck about maintaining the stability of our national and global financial systems. A whole lot of people in New York do.

Good point.  Oddly enough, in most cases, NY Law is strongly favorable to big business.  

[TwiceHorn 31570]

9 minutes ago, Bozo_Casanova said:

@TwiceHorn, no offense, but you're out of your depth on this one (the business question, not the legal questions where I'm the lay person and you are the expert). The lenders and insurers were harmed because they assumed risk at a contactual price that was fraudulently set. Their harm is the delta between what they charged and what they would have changed, if in fact loans, credit and coverage would have been offered at all.  There's also reputational damage and loss of goodwill. That's real harm.  If a loan originator lies about my income, my assets and my credit score and then sells or securitizes that debt, they are defrauding and harming the party that funds the loan irrespective of whether the loan gets paid back, because the price is wrong and offered under false pretenses. 

And I agree that it's the most extreme remedy. It's a corporate death penalty reserved for the worst, most incorrigible bad actors. Which, according to the judge and most sentient beings, the Trump Organization is, despite the excellent deconstructed burger at the Doral. 

here's the ruling, which quotes the law as follows:

I don't see anything there about whether loans get paid back or not. 

 

I am fairly familiar with 63(12), particularly as applied in this case, see my subsequent posts.

I also acknowledge the interest rate risk.  And good points have been made about systemic harm.

Nevertheless, those are better justifications for the existence of this statute, granting the AG broad powers and low burdens of proof.

They are not necessarily good justifications for invoking the most severe remedy under the statute in this case (by in this case, I mean these particular circumstances and actual proof, not the fact that it involves DJT).

All fraud and illegality and unlawfulness causes systemic harm.  That's why it tends to be criminal in addition to civil.  We tend to reserve the harshest remedies for those cases of fraud that cause actual (for lack of a better term) pecuniary losses to private parties or public entities.

I'm not actually out of my depth here.  It may have been inartfully worded, but as stated above, in the grand scheme of fraudulent conduct and private or public party harm, this is quite small-scale.  Yes, there's the systemic harm, but that's common to all fraud, what's missing here is the big financial losses to big banks (boo hoo), pension funds (ouch), and private investors (some combination of boo hoo and ouch).

Edited October 10, 2023 by TwiceHorn

[Bozo_Casanova 26579]

Just now, longhornmatt said:

I mean, that's true in a vacuum, but you can't really ignore that THEY KNEW HE WAS FULL OF SHIT.  There is almost no way he actually fooled them and they didn't know what they were getting into.

I have no idea.
When money is cheap if creates weird incentives. What people forget about banking is that deposits are liabilities, and debts are the assets. So the selling at the bank that counts is the sales and marketing of loans, and a business loan secured by property is gold. Of course due diligence gets done, but like anything else, a lot of things are taken on good faith because if the deal moves too slowly it can go to a competitor. 

I am not saying that's what enabled Trump to defraud his banks. I'm just observing that in any business there's not a lot of incentive to go the extra mile in order to find reasons to NOT do a deal and turn down a willing buyer, especially a famous one. 

[Bozo_Casanova 26579]

9 minutes ago, TwiceHorn said:

All fraud and illegality and unlawfulness causes systemic harm.  We tend to reserve the harshest remedies for those cases of fraud that cause actual (for lack of a better term) pecuniary losses to private parties or public entities.

That's really more a policy question than a legal one, right? Bad businesses hurt good ones.  Community banks, for example, are struggling with the consequences of the 2008 financial crisis that they didn't cause. As an honest business person who has likewise paid a high price for the actions of crooks in my industry, I would prefer a far more vigilant environment when it comes to bad actors and more common application of these kinds of penalties. 

[TwiceHorn 31570]

15 minutes ago, Satchel said:

If I stole 100 dollars out of the bank till, used it to make 1000 at the track and later put the 100 back in the till, didn’t I profit from a crime? And isn’t that the argument being made by NY state?

That is basically the disgorgement remedy, yes.  Regardless of whether anyone harmed (the usual justification for monetary damages -- compensation), you cough up your ill-gotten gains.

That seems to be on the table and I think much less likely to get reversed by the court of appeals.

My original statement was that I was concerned that the appellate courts may not find the "death penalty" remedy of revocation of charters to be justified by the overall course of conduct here.  It may, it may not.  I am not 100% sure whether it is appropriate or not, but knowing how courts work, I think there's a pretty decent chance that part of the ruling gets reversed.

[BamaATL 16593]

8 minutes ago, TwiceHorn said:

I am fairly familiar with 63(12), particularly as applied in this case.

I also acknowledge the interest rate risk.  And good points have been made about systemic harm.

Nevertheless, those are better justifications for the existence of this statute, granting the AG broad powers and low burdens of proof.

They are not necessarily good justifications for invoking the most severe remedy under the statute in this case.

The last part sort is what I take issue with, I personally think its very justified.  If you allow one group to skirt the law and the spirit of the law, and they get a huge advantage, what's to stop others from doing it?  While it's probably true that a lot of people in development and real estate twist things to their advantage as best they can, likely wondering even into the grey, what the Trump Co has done isn't in the same ball park as wondering into the grey.  This is and always has been brazen.  Given what they have done (and mind you continued to do even under court ordered supervision), why wouldn't they receive the max penalty?  

[Pato del Muerto 52618]

16 minutes ago, longhornmatt said:

I mean, that's true in a vacuum, but you can't really ignore that THEY KNEW HE WAS FULL OF SHIT.  There is almost no way he actually fooled them and they didn't know what they were getting into.

I do agree that he should be punished, of course.  Just because the banks went along with it doesn't mean he gets a get out of jail free card.

If the banks went along, then doesn’t it become conspiratorial?  And depending on the bank, isn’t the money for the loans coming mainly from the deposits of their customers, which are mostly insured by the fdic?  And so if he did default by such a large amount and it killed the bank, the us government would be on the hook for up to 250k per depositor?

[Brisketexan 105445]

That's really more a policy question than a legal one, right? Bad businesses hurt good ones.  Community banks, for example, are struggling with the consequences of the 2008 financial crisis that they didn't cause. As an honest business person who has likewise paid a high price for the actions of crooks in my industry, I would prefer a far more vigilant environment when it comes to bad actors and more common application of these kinds of penalties. 

I think that sending a simple message that there aren’t two sets of laws: one that lets the rich get away with lying about hundreds upon hundreds of millions of dollars, and another that will imprison a poor person for lying about $50 of monthly income, is really, really, really important for society.
The constant refrain of “the lies are so big, and the money involved so vast, that it all came out in the wash, so no harm no foul” is disgusting and more importantly, completely degrading to a society where all men are equal under the law.
If a poor person lied like that to get access to Section 8 housing (hey, they paid the rent, so it’s all good!), they’d be in fucking prison.
Trump does it, and “that’s just how business is done.”
It’s also how you end up with poor people storming rich neighborhoods and burning down houses.
We have laws or we don’t. I prefer the first option.

[TwiceHorn 31570]

1 minute ago, Bozo_Casanova said:

That's really more a policy question than a legal one, right? Bad businesses hurt good ones.  Community banks, for example, are struggling with the consequences of the 2008 financial crisis that they didn't cause. As an honest business person who has likewise paid a high price for the actions of crooks in my industry, I would prefer a far more vigilant environment when it comes to bad actors and more common application of these kinds of penalties. 

Well, when enacting statutes like Exec. Law 63, that's a policy decision that gets implemented through the statute: fraud and illegality in business are undesirable.  And when remedies are created apart from the private party (civil suits by the defrauded) and criminal cases under other statutes, that seems to be a policy determination that harm exists apart from damage to private parties, e.g. the systemic harm to which you refer.

When a statute is vague and broad like that, it invites the courts to fill in the gaps with "legal" decisions that at some level (e.g. SCOTUS) may become purely policy decisions, only slightly confined by "legal" analysis.  But they're always, to some degree or another, policy decisions.

[TwiceHorn 31570]

2 minutes ago, longhornmatt said:

As a policy question, why wouldn’t you give the corporate death penalty to the guy who gets away with it and enriches himself just as easily as the guy who defaults and costs the bank money?  The guy who got lucky is the one who can keep doing it.  The one that had it all blow up isn’t getting those opportunities again (ugh, unless they’re Donald Trump, I know).

Fair point.

One thing that skews this whole deal is that Trump was never criminally prosecuted for any of this shit.  He probably should have been.  And that would make this seem like a less critical thing; the last clear chance to bring this outlaw to some sort of justice.

But, the civil system is not about punishing wrongdoers or deterring their conduct, as you know.  It's about compensating the harmed, mostly.  

Even when a public party like the AG is authorized by a statute to bring what would otherwise be private civil cases, the usual master remedy is an injunction against further unlawful activity, that a private party can't usually get.  The charter thing is a bit like an injunction though:  we won't order you not to do it again, we'll just take away your ability to do it again in this state, altogether.