Amicus Brief: Trump v. People of the State of New York

Although Donald Trump’s criminal prosecutions have gotten most of the attention, it’s the civil investigation of the former president, his associates (including children), and his companies that may have longer-lasting effects. In September of last year, after a four-year investigation by New York state attorney general Letitia James into financial fraud allegations that boiled down to presenting inflating property values to potential lenders, presiding judge Arthur Engoron ordered the termination of the defendants’ business licenses and the dissolution of various limited liability companies. Then in February, Engoron concluded that the defendants “failed to accept responsibility or to impose internal controls to prevent future recurrences” of having “submitted blatantly false financial data” to “borrow more and at lower rates” and assessed Trump and his companies $354 million of disgorgement of ill-gotten gains (plus interest).

These were odd developments because the law, giving the AG authority to investigate civil fraud, had never been applied to so-called victimless crimes, where no banks had complained because they knew to price in the puffery that was normal business practice in New York’s sophisticated real-estate industry. The case is now on appeal to the First Department of the Appellate Division, the state intermediate appeals court that handles cases arising in Manhattan. The Manhattan Institute filed an amicus brief, arguing that Engoron’s rulings are troubling exemplars of the kind of lawfare that discourages investment in the United States and undercuts job creators’ confidence.

Putting aside the dubious origins of James’s crusade—she ran for office on a platform of “get Trump”—the heart of this case relies on a fundamental error in basic civil procedure. Her case relies on a “preponderance of the evidence” standard—a “more likely than not” burden of proof typically reserved for ordinary civil disputes—even as she accuses President Trump of quasi-criminal fraud rather than garden-variety civil infractions. And the penalties sought are severe, including hundreds of millions of dollars in fines and a “business death penalty” akin to the kind of punitive sanctions one would expect in a criminal case.

Traditionally, when the state seeks to impose such draconian remedies, it has to prove its case by “clear and convincing evidence”—a higher standard that appropriately reflects the seriousness of the charges and potential consequences. By accepting James’s lower standard of proof, Engoron set a dangerous precedent that undermines the principle of equal justice under law. If his decisions are allowed to stand, it will open the door for future cases where individuals and businesses are subjected to severe penalties based on insufficiently rigorous evidence.

Ilya Shapiro is a senior fellow and director of Constitutional Studies at the Manhattan Institute. Follow him on Twitter here.

James R. Copland is a senior fellow at the Manhattan Institute and director of Legal Policy. 

Tim Rosenberger is a legal fellow at the Manhattan Institute.

Special thanks to former law school associate Dennis Wieboldt.

Photo by Michael M. Santiago/Getty Images