• Fri. Jul 19th, 2024

What to know about Trump’s fraud trial

What to know about Trump's fraud trial

New York

Former President Donald Trump showed up at a Manhattan courtroom for the opening day of the New York civil case against him and his namesake company attacking the judge in the case and the New York attorney general at every possible moment.

Trump’s appearance turned the courthouse into an extension of the campaign trail, where he has railed against the four criminal indictments against him, and now, a civil case where Judge Arthur Engoron ruled last week that Trump and his co-defendants were liable for fraud.

Inside the courtroom, Trump’s attorneys also sparred with the judge as opening statements began, a sign that they’re likely to take a combative approach with a trial that the judge expects to last into December.

Here’s what to know from the first day of Trump’s trial:

Trump’s arrival at the downtown Manhattan courthouse Monday morning turned the event into a spectacle of his own making. Even though he did not have to appear, the former president used the opportunity to bolster his presidential campaign.

The New York attorney general’s case is civil, not criminal, but it threatens his business in New York, and Trump’s appearance underscored that he views it as urgently as the other cases against him brought in other state and federal courts.

In front of the cameras and on his social media site, Trump attacked New York Attorney General Letitia James for bringing the case against him. He attacked the judge for the ruling last week. And he sought to tie them to special counsel Jack Smith’s criminal indictments, even though they are unconnected.

“This has to do with election interference, plain and simple,” Trump said before walking into the courtroom. “They’re trying to damage me, so I don’t do as well as I’m doing in the election.”

When he left the courtroom on a lunch break, Trump returned to the cameras in the hallway – twice – to rail against what he had heard. Trump attacked the judge as an “operative” and said he should be disbarred for ruling against him.

Asked why he showed up in person Monday, Trump returned to a familiar refrain: “Because I want to watch this witch hunt myself.”

Trump’s appearance also put him face-to-face with James, who was sitting in the courtroom Monday. When he first walked into the courtroom, Trump avoided eye contact with the New York attorney general, though he did look her way as he left for lunch.

At the end of the day, Trump complained that he had been kept from the campaign trail – even though he was there voluntarily and, of course, received blanket coverage for his court appearance.

“I’ve been sitting in a courthouse all day long, instead of being in Iowa, New Hampshire, South Carolina or a lot of other places I could be at,” Trump said.

The attorney general’s office made clear Monday that it plans to go for the jugular.

Kevin Wallace, an attorney for the AG, urged the judge in his opening statement to bar Trump – who rose to fame and power over 50 years with a real estate empire – from doing business in New York.

Wallace alleged that Trump and his co-defendants conspired to commit persistent and repeated fraud and that Trump’s financial statements convinced banks to take on hidden risk “to the tune of hundreds of millions of dollars.”

“While it may be one thing to exaggerate for Forbes magazine … you cannot do it while conducting business in the state of New York,” Wallace said.

The opening statement underscored the risk the case poses to Trump and the Trump Organization, the former president’s business in New York, where Trump built up his name and image before he launched the political campaign that led him to the White House in 2016.

James brought the $250 million lawsuit last September, alleging that Trump and his co-defendants committed fraud in inflating assets on financial statements to get better terms on commercial real estate loans and insurance policies.

Last week, Engoron ruled that Trump and his co-defendants were liable for “persistent and repeated” fraud. Trump and his companies could be forced to pay hefty sums in damages for the profits they’ve allegedly garnered through their fraudulent business practices.

In the trial that began Monday, Engoron will consider just how much the Trumps and their businesses will have to pay, and whether they could be banned from engaging in commercial real estate transactions in New York or borrowing from New York banks.

The attorney’s general office is seeking in the trial to prove six additional claims, including falsifying business records, issuing false financial statements and insurance fraud.

With the former president looking on, Trump’s lawyers argued Monday that the attorney general’s case was flawed, saying that the differences in valuations were just part of the commercial real estate business.

Trump attorney Christopher Kise argued there was no intent to defraud and “no victims” in the case.

Kise pointed to documents from Deutsche Bank showing the bank valued Trump’s net worth $2 billion less than Trump did – but still underwrote the loan for Trump.

“They were eager,” he said.

“This is what happens every day in this city,” he added.

Trump attorney Alina Habba also spoke during opening arguments, attacking the judge’s finding in last week’s ruling that valued Mar-a-Lago at $18 million (the judge said Monday that his ruling did not specifically value Mar-a-Lago at $18 million, but was citing Palm Beach tax records).

Mar-a-Lago would be sold for at least $1 billion, Habba claimed.

“The value is what someone is willing to pay. The Trump properties are Mona Lisa properties,” she added. “That is not fraud, that is real estate.”

After Habba finished her opening statement – which attacked James for campaigning that she would “get Trump” – Engoron pushed back against the Trump attorney.

The judge noted that the defense team already had tried to dismiss the case claiming by claiming James brought it as a “witch hunt” against Trump. He had already denied the motion, Engoron said, and his ruling had been affirmed by a New York appellate court.

“So Ms. James’ motivations are no longer at issue in this case, are they?” Engoron said.

The judge also sparred with Habba over a discussion about an accounting disclaimer for Mazars, Trump’s former accounting firm. The disclaimer essentially said, “We’re relying on the Trump Organization,” Engoron said. “That’s how I read it.”

“No, your honor,” Habba responded, arguing that the Trump Organization relied on Mazars and “they’re the accountants.”

Trump watched intently during the back and forth between Habba and Engoron.

Later, Kise argued that the problem with the judge issuing summary judgment is that “you haven’t heard the evidence.

“You owe it to the defendants to listen to the evidence,” Kise said. “We have to at least give these witnesses the opportunity to take the stand.”

Kise and Engoron debated whether a valuations expert’s testimony at trial would be considered evidence.

“I intend to be very patient and liberal in listening to things,” Engoron said to Kise

The exchanges underscored how the upcoming trial is going to be contested – especially when the judge, and not a jury, will decide the outcome.

Near the end of the day Monday, Engoron questioned whether lengthy witness testimony about 2011 financial documents was a “waste of time” because of statute of limitations applying to the case expired in 2014.

The issue is something to watch going forward, as Trump and his lawyers say they can toss a majority of the case over the statute of limitations.

The judge was responding to testimony from former Mazars accountant Donald Bender about the 2011 financial documents, acknowledging that a New York appellate court had ruled the statute of limitations only allowed allegations from 2014 onward to apply in the case.

“I trust that you can relate the 2011 documents to something that happened later,” Engoron said to the attorney general’s lawyers. “Or this has all been a waste of time.”

The defense agreed with Engoron’s assertion – prompting Trump to give a thumbs up.

The judge’s comment marked a small win for Trump, because the judge acknowledged the statute of limitations that had been decided by the appeals court, though the judge also acknowledged the time limitation in his order last week.

At the same time, the judge did allow the witness testimony about the 2011 financial documents on Monday over the objection of Trump’s attorneys, as the attorney general’s office indicated it would connect the testimony to allegations that fall within the statute of limitations – even though that didn’t happen Monday.

Bender is returning for a second day of testimony on Tuesday.

Still, the judge’s comments prompted Trump to praise Engoron after he had attacked him earlier in the day.

“The last five minutes was outstanding because the judge essentially conceded that the statute of limitations, that we won at the court of appeals, is in effect,” Trump said. “Therefore about 80% of the case is over.”

Most of the alleged fraud relates to transactions before 2014, but Engoron ruled last week that financial statements submitted after 2014 are still relevant regardless of when the original loan was transacted. Monday’s comments addressing admissible evidence do not indicate that he will change that ruling.

Trial is going to last a long time – and will get in the financial weeds

Kicking off the trial Monday morning, Engoron confirmed that he expects the trial to last more than two months – until December 22, the Friday before Christmas.

The trial is also going to get into the financial weeds, as the New York attorney general’s office and Trump’s lawyers debate financial statements, accounting practices and valuations of property.

Wallace’s opening statement for the attorney general referenced statements of financial condition and played clips of depositions with Trump’s children, Eric Trump and Donald Trump Jr., while addressing “GAAP,” the Generally Accepted Accounting Principles.

While Trump and his children are expected to be called as witnesses in the trial – appearances that are sure to provide some fireworks – much of the trial is going to focus on the nitty gritty of accounting that’s at the heart of the attorney general’s case that now threatens Trump’s business.

This story has been updated with additional developments.

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