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We don't especially love writing about the daily lunacy that is Donald Trump's legal maneuvering, but hey, he's running for president. And it could just be relevant.
To start, in case he's not already spending enough on lawyers, yesterday Trump sued ABC News and George Stephanopoulos for defamation. The basis of the claim is that: (1) Stephanopoulos said that a jury twice found Trump liable for raping E. Jean Carroll, (2) a jury did not say that, and so (3) Stephanopoulos defamed Trump.
There is, of course, zero chance that Trump wins this suit. First of all, the bar for defaming a public figure is impossibly high. Sure, it's not too high for Trump to clear, which is why he now owes Carroll almost $100 million. But it's high; he'd have to prove in court that Stephanopoulos knew that what he was saying was false, and that he maliciously proceeded to say it anyhow, which in turn damaged Trump in some measurable way.
There are many potential defenses here, but the best one is: "I told the truth." Something cannot be defamatory if it is factual. And the fact is that a jury has found that Trump sexually abused Carroll, and there is no substantive distinction between that and rape. This is not just our opinion; Judge Lewis Kaplan has twice written orders in which he declared that the former president did rape Carroll. Most clearly, in August of last year, he wrote: "Mr. Trump in fact did 'rape' Ms. Carroll as that term commonly is used and understood."
There is no way this goes to trial, and we tend to assume that Trump will quietly drop the matter now that he's gotten his headlines out of it. We are not sure exactly what purpose this kind of nonsense achieves; either Trump is so angry he's just lashing out at anyone he can, or he wants to use this for fundraising, or both. The trade-off is that he's burning through even more money, reminding voters (once again) that he's a court-certified rapist, and potentially giving Carroll more ammunition for a third defamation suit. Trump's move seems unwise to us.
Moving along, when a lawyer agrees to work for Trump, there is an enormous risk they'll end up being asked to do something illegal. And if and when they do it, then there's an excellent chance they'll be thrown under the bus by their client. Some of the better lawyers who take Trump's money manage to take steps to protect themselves from this. Some of the lesser lawyers... not so much.
Case in point is Alina Habba, whose business card might as well say "shyster." You see, there is a woman named Alice Bianco, who used to work at Trump's Bedminster club. She made a sexual harassment claim, one with a lot of merit, and then settled it for a paltry sum while also agreeing to sign a heavy-duty non-disclosure agreement. Who told Bianco to take that deal? A "friend" of hers who was a member of Bedminster, and who warned Bianco that her case was weak. That "friend" was... Alina Habba, who somehow forgot to mention that she works for Trump.
Eventually, Bianco got a real lawyer, managed to get the original agreement voided, and secured much more favorable terms. And the new agreement, the one that releases Bedminster and Trump from all future liability, specifically includes this: "The parties agree that Alina Habba is not a party to this release." So, Habba is still liable to be sued for fraud. Or to be sanctioned by the New Jersey State Bar. Or both. Of course, she's already on the hook for a six-figure sum for other shenanigans she pulled on Trump's behalf. Why do lawyers accept him as a client, again?
And finally, since we're on the subject anyhow, let's address in a little more detail how bad Trump's financial position is vis-à-vis the $450 million+ he owes due to the fraud judgment in New York State. We've had a bunch of questions about this situation, so might as well address them now, rather than waiting until Saturday.
To start, it's really not surprising that he's been unable to secure a loan against his "wealth." His primary asset is commercial real estate, and that may well be the single-worst sector of the economy right now. With the COVID-induced move from "work at work" to "work at home," not to mention the collapse of many brick-and-mortar retailers thanks to there being more convenient online options, the supply of commercial real estate is much greater than the demand right now. No lender is accepting commercial properties as collateral, even if they come from a 100% above-board business. And then add to that the likelihood that Trump's properties are encumbered by mortgages or liens, and that he's overstated their values, and it's entirely unsurprising that he was unable to get anyone to underwrite his bond.
At this point, assuming a lender does not come forward, Trump has three basic options that he might pursue. The first would be to get a well-heeled "friend" to front him the money. Vladimir Putin could do it; so could Crown Prince Mohammed bin Salman. Alternatively, a U.S.-based businessman might do it, although Elon Musk clearly said "no" already, and there aren't too many other Trumpy billionaires who can lay out $500 million without blinking. Further, it would be nearly impossible for Trump to hide where the money came from in this scenario.
The payment from Trump to the New York State escrow account couldn't be on a credit card. Trump's credit limit is probably a tad less than half a billion. It would have to be a wire transfer, in which case the judge could easily discover which bank held the $500 million temporarily. If the judge suspected something illegal, he could issue a subpoena for a list of transactions on that account. The information about where the money came from could also leak. Leaks happen. There is much reason to think that some number of persuadable voters would not be happy about a candidate who is clearly in hock to a foreign leader or a U.S. tycoon.
The second option is for Trump to quickly sell some of his properties himself. Time is running short, of course, and anyone he might talk to would know they have him over a barrel. He'd be lucky to get 75% of the fair market value (and fair market value is, of course, far below the values he claims). Further, assuming his properties are leveraged, he would have to satisfy those obligations before pocketing the residue. Between the weak negotiating position and any potential encumbrances, it's well within the realm of possibility that he might only be able to recover 10% or 15% of the market value of a particular property to put toward his judgment. And if that's the rate, then Trump could end up selling a huge chunk of his portfolio to scrape together the funds he needs.
The third option is to let AG Letitia James do her thing, and sell the properties at auction (or through whatever other means she might choose). This has all the downsides of option #2, in that lien/mortgage holders would still have to be paid first, while buyers would be in a very favorable position. However, if Trump is doing the selling, then he is motivated to maximize returns. If James is doing the selling, she has much less motivation of that sort. Most likely, to avoid a lawsuit in the future, she would hand the properties over to a top real estate auctioneer like Sotheby's or Christie's and tell them to take the highest bid. But that could well be 50% of the true market value. Trump would sue later, but the auctioneer would then say: "We took the highest bid. What else did you want us to do?" And again, if some big chunk of the take has to go to pay off encumbrances, then the amount New York State realizes could be tiny, forcing more properties to be seized and auctioned.
In short, Trump's empire is very much at risk of serious shrinkage, or even total collapse. He is really going to be unhappy if the court decides not to reduce the bond or to give him extra time to try to find the money. Next Monday, the most powerful person in the United States will not be Joe Biden, but Judge Arthur Engoron. (Z)