Criminal Defense Lawyer Analyzes Trump’s NY Civil Fraud Lawsuit, Says There’s No Clear Victim

Former President Donald Trump speaks to the media during the third day of his civil fraud trial in New York on Oct.4, 2023. Kena Betancur/AFP via Getty Images

As a New York civil fraud trial against the Trump Organization enters its fifth day, former prosecutor David Gelman offered his perspective on where the case is headed and the flaws he sees in New York Attorney General Letitia James’s case.

In an interview with NTD News’ “Capitol Report,” Mr. Gelman—who served as the assistant county prosecutor in Burlington County, New Jersey before launching his own criminal defense practice in 2017, Gelman Law—argued that there’s no clear victim represented in the ongoing civil lawsuit against former President Donald Trump and his real estate empire. Mr. Gelman’s arguments are similar to those President Trump’s legal team have made so far in the case.

The lawsuit, brought by Ms. James’s office, argues that the Trump Organization inflated the value of its various real estate holdings in order to gain more favorable terms on bank loans and business insurance policies. President Trump’s legal team has argued that its property valuations on various loan applications included sufficient legal disclaimers and calls for lenders to perform their own due diligence.

“Banks aren’t going to just loan money to individuals, by their word. If that was the case, we can all say our houses are worth hundreds of millions of dollars to get loans,” Mr. Gelman said of the Trump team’s legal defense. “So it’s not a cut-and-dry situation.”

Even before the trial began, the judge overseeing the case, Judge Arthur Engoron, entered a summary judgment that the Trump Organization is liable for defrauding lenders and will lose its New York business licenses. In his summary judgement, Judge Engoron rejected the Trump Organization’s arguments that its legal disclaimers were sufficient, instead ruling that the Trump Organization had a responsibility to accurately evaluate its property values regardless of any legal disclaimers it included in property evaluations it provided to banks.

“It’s certainly not a victim-oriented matter here for the simple reason that everything has been paid back, and what hasn’t been paid back has not been defaulted on,” Mr. Gelman argued. “So the president or the company, if you will, have paid everything they were supposed to be paying, and they keep continuing to pay the bills. So, again, this is really a waste of time and a waste of taxpayer money, if anything.”

NY Judge Has Rejected ‘No Victim’ Argument

In his summary judgment, Judge Engoron agreed that Trump’s legal team was correct that there is no evidence of default, breach of contract, or late payment on any of its business loans and that there was no “complaint of harm” by the banks that approved the Trump Organization’s business loans. Still, the judge ruled that the Trump Organization acted fraudulently and remained liable under the legal standards of “disgorgement” in New York state law.

Whereas the legal standard of “restitution” allows the victim of legal wrongdoing to seek repayment if they can demonstrate they were harmed, the standard of “disgorgement” simply aims to punish a legal wrongdoer by depriving them of their ill-gotten gains.

“Disgorgement is distinct from the remedy of restitution because it focuses on the gain to the wrongdoer as opposed to the loss to the victim,” Judge Engoron wrote in his summary judgment, citing a 2014 New York legal precedent. “Thus, disgorgement aims to deter wrongdoing by preventing the wrongdoer from retaining ill-gotten gains from fraudulent conduct. Accordingly, the remedy of disgorgement does not require a showing or allegation of direct losses to consumers or the public; the source of the ill-gotten gains is ‘immaterial.’”

Trump Appealing Judge’s Ruling

President Trump’s legal team filed a new appeal on Wednesday in the New York fraud lawsuit, arguing against Judge Engoron’s decision not to dismiss the case and to instead find the Trump organization liable for the claimed fraud.

President Trump addressed members of the press before the trial began in Manhattan on Monday, insisting Judge Engoron had “undervalued” his Mar-a-Lago resort property in Palm Beach, Florida, along with other real estate in question in the ongoing trial.

Other real estate professionals are also questioning how Judge Engoron concluded that the Trump Organization didn’t properly value his various properties.

“Appraisal values and market values are just not the same thing. It’s a well-known fact,” Eli Beracha, chair of the school of real estate at Florida International University, told CNN in a recent interview. “That’s especially true for properties that are unique. And it’s very easy to argue [Mar-a-Lago] is a unique property.”

Dina Goldentayer, the executive director of sales at Douglas Elliman in South Florida, also contested Judge Engoron’s property valuation and described Mar-a-Lago as a “trophy asset” that’s “in a completely different league of its own” in terms of valuation.

Ms. James’s office has suggested Mar-a-Lago could be worth as little as $18 million, whereas the Trump Organization has submitted the affidavit from luxury real estate broker Lawrence Moens, who has said Mar-a-Lago could be worth up to $1.5 billion.

“Letitia James is stating that Mar Lago is only worth $18 million,” Mr. Gelman said. “You and I both know that that’s impossible—just look at the location alone. So we all know that this is just really a political stunt.”

From NTD News