A New York judge’s decision to levy a $355 million fine against Donald Trump in his civil fraud case might seem overly harsh, given the absence of any victim demanding reparation or a key witness accusing Trump.
$355 Million Civil Fraud Penalty
This hefty fine was made feasible by a relatively obscure, 70-year-old state statute, known informally as 63(12), from its location in New York’s legal code.
NY’s 63(12) Statute
This law serves as a powerful tool for the state’s attorney general, Letitia James, who has employed it against various major corporations, including Exxon Mobil, Juul, and pharmaceutical mogul Martin Shkreli.
Ban from NY Business Operations
On Friday, this legislation played a pivotal role in James’ significant triumph over Trump, resulting not only in the financial sanction but also in Trump being prohibited from operating any business in New York for three years, with his sons facing a two-year ban.
Business Future Threatened
Friday’s decision highlighted the ongoing serious impact of civil cases on Trump, threatening his business ventures even as he prepares for four separate criminal trials, with the first scheduled for next month.
Guilty of Multiple Frauds
Judge Engoron found Trump guilty of fraud, conspiracy, and making false financial and business statements. He also prohibited Trump from holding a director position in any New York company for three years.
Narrow Escape
Although Engoron refrained from completely dissolving the Trump Organization, his extensive 93-page opinion depicted Trump as unapologetic and highly prone to repeating fraudulent acts. Engoron described Trump and his co-defendants as showing an almost pathological ‘lack of remorse and contrition.’
Monitor Imposed
The judge additionally mandated that a monitor, Barbara Jones, be given greater authority over Trump’s company, directing her to nominate an independent executive from within the company to report back to her.
‘Tyrannical Abuse of Power’
Trump’s lawyer, Christopher Kise, expressed intense disapproval, remarking, “The sobering future consequences of this tyrannical abuse of power do not just impact President Trump.”
“When a court willingly allows a reckless government official to meddle in the lawful, private and profitable affairs of any citizen based on political bias, America’s economic prosperity and way of life are at extreme risk of extinction.”
Alleged Financial Manipulations
In the lawsuit against Trump, Attorney General James charged the former president with artificially inflating his net worth to secure favorable loans and other financial advantages.
According to her, Trump’s actions not only defrauded lenders but also compromised the integrity of New York’s business environment.
Preventing Future Business Fraud
Kevin Wallace, a lawyer in James’ office, stated that Trump’s conduct “prices out honest borrowers and can lead to more catastrophic results,” adding, “That’s why it’s important for the court to take the steps to protect the marketplace to prevent this from happening again.”
Bankers Testify Positively
The alleged victims, the bankers who loaned to Trump, testified positively about their client relationship with him.
Despite numerous witnesses supporting James’ assertion that Trump’s annual financial statements were fictional, there was no concrete evidence presented to prove Trump’s deliberate intention to deceive the banks.
The Unique Nature of 63(12)
Under the unique 63(12) law, proving Trump’s intent to defraud or actual financial harm wasn’t necessary. “This law packs a wallop,” remarked Steven Cohen, a former federal prosecutor and top official in the attorney general’s office, pointing out that it doesn’t require showing harm.
Pre-Trial Rulings
Notably, before the trial, Justice Engoron sided with James on the fraud allegation. James had a higher burden at trial to demonstrate Trump’s intentional violation of other state laws.
Fraud Without Proving Intent
Under 63(12), the law crucial to the Trump case, Attorney General James had significant leverage. It allowed her to pursue fraud charges without proving intent or financial harm.
The Scope of 63(12)
The law enabled her to seek forfeiture of funds acquired through fraud, with Trump ordered to pay approximately $355 million, partly for savings on loans due to inflated net worth.
Investigative Powers
The law also granted the judge broad discretion in penalties and investigative powers to the attorney general, including pre-lawsuit investigations.
Previous Clash with 63(12)
This isn’t Trump’s first encounter with 63(12), previously used against Trump University, leading him to criticize its broad authority as “VERY UNFAIR” on social media.
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