Very good post from
https://x.com/3ndeveloper/status/1759306004087677379?s=46
Let's talk about Trump and the judgement against him for $350,000,000+ ($450M will pre-judgment interest).
Let's avoid bringing politics into this conversation.
Here is my understanding of the case that was argued against Trump:
- Asset valuations were grossly exaggerated to the extent that it was fraudulent
- Due to the severely increased asset values, Trump was able to obtain significant benefits that were "ill-gotten"
- These benefits include: 1) larger loan amounts; 2) lower interest rates on the loans; 3) lower insurance premiums.
Trump received "ill-gotten gains" by having banks lend him money at lower rates than they would have if they had known the true value of the underlying assets (e.g. 10%-12% instead of 4%-5%).
- Trump also received ill-gotten gains by profiting on developments that relied on construction loans, which he never should have received.
2-
Here is my understanding of Trump's defense:
- Asset valuations can never be objective, and were based on expert opinions
- Trump's lenders never lost a penny on these loans, and all of his loans were always paid on-time, and in full (remember, we're only focusing on the loans that were referenced for this case, and not the bankruptcy cases in the past)
I want to avoid the nuances in the case (e.g. the market value of Mar-A-Lago vs. assessor value, and the whether the covenant Trump recorded actually impaired its value), and just focus on the bigger picture here.
To me it appears that the crux of the Attorney General's case was entirely dependent on her argument being correct - due to increased asset valuations, Trump received loans and rates he should not have received.
This is where I struggle
Asset Values
Asset values are truly based on the eye of the beholder. The Buyer, and the Buyer's development plan, will create unbelievable variations in what an asset
3-
- Let's assume we have a 40k SF piece of land at the Main-And-Main corner of Times Square (NYC).
- Let's also assume there are only 2 real estate Buyers in this entire universe, and no one else exists
- Real Estate Buyer#1: 7-Eleven convenience store operator who plans to build a 3k SF store
- Real Estate Buyer#2: Highrise Developer partnering with Waldorf Astoria, and is planning a 75-story mixed-use development (hotel, residential condos, and retail on bottom floor), and has a pathway towards installing massive digital billboards on the building.
The convenience store operator may max out at $30M for the value of the land. There is only so much value he can extract from operating a convenience store at the site. Regardless of the extent of foot traffic, there is only so much profit that can be made by selling soda, chips, and cigarettes.
The highrise developer may max out at $400M (this figure is a guess).
