What does a TRUMP presidency look like?

[Admiral Yi]

The NY AG doesn't decide who's guilty or not though - they decide who to prosecute which will depend on factors like whether there's sufficient evidence to reasonably have a chance at winning the case (how much evidence and is it high quality) and probably the severity of the offence.

In the UK prosecutors also have a public interest test, I imagine it's even more discretionary in the US given that it's a political role.

It doesn't seem from Joan's description that the bar is set very high for evidence.  Surely one document with an inflated valuation is sufficient?

Joan has mentioned the severity before, and the problem I have with that in a vacuum is that from layman's perspective the magnitude of the overstatement IF it has no effect on the counterparty's decision and/or it causes the counterparty no harm doesn't seem very material.  I.e. the common law definition makes intuitive sense to me but the NY variant does not.

[Sheilbh]

It doesn't seem from Joan's description that the bar is set very high for evidence.  Surely one document with an inflated valuation is sufficient?

There'll be a defence challenging that and from Joan's description they have to prove materiality too. So chances are you won't just want one document, they'd still have to build a case.

And this is where severity and the public interest comes in because it may be relatively easy to prove but obviously there are limited resources for any prosecutor (or court system). If you have sufficient evidence they'd probably then look at how egregious it is, if it is, in all the circumstances, in the public inerest to prosecute - and (based on every American drama I've seen) probably a healthy dose of political interest too.

Joan has mentioned the severity before, and the problem I have with that in a vacuum is that from layman's perspective the magnitude of the overstatement IF it has no effect on the counterparty's decision and/or it causes the counterparty no harm doesn't seem very material.  I.e. the common law definition makes intuitive sense to me but the NY variant does not.

But that's a question for the legislators surely?

By the sounds of it NY historically has an issue with business fraud, so they have a broad set of laws that target that because legislators have decided there is a public policy interest in cracking down on fraud even if no-one is harmed and even if it is only a civil claim. They have decided there is a public policy interest in allowing the AG to attempt to enforce a degree of honesty in the business environment (and you can see the public policy reasons why).

So in that context severity again comes into it.

They decide who's definitely not going to be found guilty, though.

Yeah. It has always been the case that just having enough evidence is not enough to prosecute. The alternative is a duty on prosecutors to prosecute every crime or offence that they can where they have sufficient evidence, without any regard to severity or the public interest. Which is a harsh legalist world. Obviously in the US it is a political process because it's a political role.

I'm not sure in the US, but an example in England is that prosecutors have very extensive guidance on public interest factors in assisted suicide cases - because it's very clearly not in the public interest to prosecute every one of thsoe offences, even if they are all illegal.

[Admiral Yi]

There'll be a defence challenging that and from Joan's description they have to prove materiality too. So chances are you won't just want one document, they'd still have to build a case.

And this is where severity and the public interest comes in because it may be relatively easy to prove but obviously there are limited resources for any prosecutor (or court system). If you have sufficient evidence they'd probably then look at how egregious it is, if it is, in all the circumstances, in the public inerest to prosecute - and (based on every American drama I've seen) probably a healthy dose of political interest too.

This may be a case of me not understanding a legal term.  Doesn't materiality in this case refer to harm to the counter party?

But that's a question for the legislators surely?

By the sounds of it NY historically has an issue with business fraud, so they have a broad set of laws that target that because legislators have decided there is a public policy interest in cracking down on fraud even if no-one is harmed and even if it is only a civil claim. They have decided there is a public policy interest in allowing the AG to attempt to enforce a degree of honesty in the business environment (and you can see the public policy reasons why).

So in that context severity again comes into it.

Sure.  The NY legislature handed immense discretion and power to the AG.  Everyone in NY is guilty of fraud, prosecute whoever you like.

I don't really see the compelling public policy rationale for this law, unless it's the belief that it would be nice if everyone told the truth all the time.

[viper37]

The NY AG doesn't decide who's guilty or not though - they decide who to prosecute which will depend on factors like whether there's sufficient evidence to reasonably have a chance at winning the case (how much evidence and is it high quality) and probably the severity of the offence.

In the UK prosecutors also have a public interest test, I imagine it's even more discretionary in the US given that it's a political role.

It doesn't seem from Joan's description that the bar is set very high for evidence.  Surely one document with an inflated valuation is sufficient?

Joan has mentioned the severity before, and the problem I have with that in a vacuum is that from layman's perspective the magnitude of the overstatement IF it has no effect on the counterparty's decision and/or it causes the counterparty no harm doesn't seem very material.  I.e. the common law definition makes intuitive sense to me but the NY variant does not.

I don't think the NYAG decided to press charges against DT out of the blue.

Imho, they were investigating him on something else, and this came up.

Let's say you want to refinance your home mortgate.  You submit your city's tax account showing the house is worth 500k$.  But you believe the house is worth in fact, 800k$.  So you have it appraised to settle the right price and borrow the right amount to the bank.

Suppose you are not an honest person.  You find a not so honest person to appraise your house and that person inflates the value to 1M$.

Now, the bank does not know that, it has a paper saying it's worth 1M$ and it trusts the evaluation.

We will know the details during the defense, but I believe this is something like this that happened with Trump's commercial buildings.  I doubt the banks simply loaned him based on what he thought the buildings were worth.

Now, likely, someone spoke about this during one of the other investigations on DT, and the NYAG pushed the matter a little further.  That is my theory.

[Sheilbh]

This may be a case of me not understanding a legal term.  Doesn't materiality in this case refer to harm to the counter party?

It's not at all you not understanding a legal term - you can have (and I have) very long arguments over what is and isn't material. It simply means important or significant. So there is a distinction here between insignificant statements which aren't caught and ones that are significant - which is what they AG needs to demonstrate.

Materiality is used a lot in law - material harm, material fact, material breach etc. What it always means is basically that it is significant in some way, it's like a de minimis threshold in some ways - but that is always very context specific. It's a term that I've always been taught to avoid precisely because it's so woolly and uncertain - there's shedloads of cases on what is or isn't material in various different contexts - but it's everywhere so it's often a losing battle

Obviously I'm an English lawyer and a contract lawyer, so it may have a specific meaning in the US or NY

Sure.  The NY legislature handed immense discretion and power to the AG.  Everyone in NY is guilty of fraud, prosecute whoever you like.

I don't really see the compelling public policy rationale for this law, unless it's the belief that it would be nice if everyone told the truth all the time.

That there's a public policy interest in encouraging an environment where businesses conduct themselves honestly and not everyone has to be guilty of fraud. That even if it's impossible to prove direct harm, honest businesses are not disadvantaged by endemic fraud.

[Admiral Yi]

That even if it's impossible to prove direct harm, honest businesses are not disadvantaged by endemic fraud.

I'm scratching my head trying to figure out how it can simultaneously be impossible to prove direct harm but businesses are disadvantaged.

[Sheilbh]

I'm scratching my head trying to figure out how it can simultaneously be impossible to prove direct harm but businesses are disadvantaged.

If everyone else in a market is gaining some advantage because they're all lying then their one honest competitor in NY is being harmed by those lies, even if they cannot show that there is direct harm from any single one of those lies (not least because there's no reliance).

[Admiral Yi]

If everyone else in a market is gaining some advantage because they're all lying then their one honest competitor in NY is being harmed by those lies, even if they cannot show that there is direct harm from any single one of those lies (not least because there's no reliance).

Same question: how can one party gain an advantage and it be impossible to prove the other party was harmed?

[Jacob]

If liars have access to ten times the capital compared to truthful people, then liars will be able to gain control of a significantly larger proportion of assets than honest people.

That seems harmful to honest people, whether or not they were screwed on any individual deal.

[Admiral Yi]

If liars have access to ten times the capital compared to truthful people, then liars will be able to gain control of a significantly larger proportion of assets than honest people.

That seems harmful to honest people, whether or not they were screwed on any individual deal.

If liars are able to access 10 times the capital due to their lying, surely that has harmed the lender, no?  But that is not an element under the NY law.

[Sheilbh]

If liars are able to access 10 times the capital due to their lying, surely that has harmed the lender, no?  But that is not an element under the NY law.

Right but that's a direct fraud case.

My point is it also harms their honest competitors in the same market - especially if it's not a single bad actor but an serious endemic problem, which is what I understood from Joan's description of the background. Which is why there's a public policy interest in not having markets full of liars.

[Admiral Yi]

Right but that's a direct fraud case.

My point is it also harms their honest competitors in the same market - especially if it's not a single bad actor but an serious endemic problem, which is what I understood from Joan's description of the background. Which is why there's a public policy interest in not having markets full of liars.

Fair enough.  And is this indirect harm also impossible to prove?

[Sheilbh]

Fair enough.  And is this indirect harm also impossible to prove?

I think it's even more difficult than that.

You can't sue the market. So there's a question of who you'd sue. Also for what - they're your competitors you probably don't have a contract with them (as the lender would) or any other type of relationship that you could say they've breached, you can't just have a general claim of fraud or misconduct.

Purely from a contract perspective, I don't know about in the US but in England (this is very broad brush) you will generally struggle to claim any indirect loss.

So I think you'd probably not have anyone to sue, I'm not sure that you'd have a claim and I think you'd really struggle to demonstrate loss. That's why I think if there's an issue in markets in your jurisdiction of business fraud, there's a public policy interest. Doesn't necessarily mean NY's law is right - but you can see how and why it developed.

[Admiral Yi]

I think it's even more difficult than that.

You can't sue the market. So there's a question of who you'd sue. Also for what - they're your competitors you probably don't have a contract with them (as the lender would) or any other type of relationship that you could say they've breached, you can't just have a general claim of fraud or misconduct.

Purely from a contract perspective, I don't know about in the US but in England (this is very broad brush) you will generally struggle to claim any indirect loss.

So I think you'd probably not have anyone to sue, I'm not sure that you'd have a claim and I think you'd really struggle to demonstrate loss. That's why I think if there's an issue in markets in your jurisdiction of business fraud, there's a public policy interest. Doesn't necessarily mean NY's law is right - but you can see how and why it developed.

Since we're talking about a civil case in which the state is the plaintiff, it's not very relevant whether a competitor has standing to sue for indirect harm.

The question that I am posing is whether a fraud law that does not include harm is a good idea or a bad idea.

And by implication, whether Donald is a crook or maybe, just maybe THE GREATEST AMERICAN WHO EVER LIVED.

[Sheilbh]

Since we're talking about a civil case in which the state is the plaintiff, it's not very relevant whether a competitor has standing to sue for indirect harm.

The question that I am posing is whether a fraud law that does not include harm is a good idea or a bad idea.

But isn't that the point? A competitor doesn't have standing. The people who may suffer the effects of a fraud in a market where there's lots of lying don't have a remedy - which is why the law exists in effect for the state to in effect step in.

I think it's where the public policy point comes in. I don't see what waiting until the state can prove to a court there's some direct or indirect harm somewhere in order to bring a case - the point is whether you want to encourage  businesses to operate honestly as an objective, which I think is a reasonable starting point for legislators.

To be honest the bit I struggle with from Joan's description is the lack of intention (although - not sure in the US - but here there's also recklessness with fraud). To me that goes to the heart of what a fraud is - and in my view the public point of you don't want markets where businesses are knowingly or recklessly making statements. Belief shouldn't be a defence, but I feel like there does need to be some degree of intent. Much like the harm point it almost makes it sound almost strict liability, almost as if the untruth is a pollutant.

And by implication, whether Donald is a crook or maybe, just maybe THE GREATEST AMERICAN WHO EVER LIVED.