Brian Lehrer: Brian Lehrer on WNYC. We're actually going to close the show today in a different way than we usually do. We are going to talk about some breaking news, and that is that it's day two of Donald Trump's corporate fraud trial here in New York. He's in the courtroom again today here in the city. We'll get a take now on what's at stake not just for Trump but for corporate honesty here in New York in just a second as we introduce our guest.

Just a little bit of background. The trial began yesterday. It also names Trump's sons, Eric Trump and Don Jr., as co-defendants. Strap in, it could call over 50 witnesses including accountants, bankers, and Trump Organization employees. This is a civil suit so he won't wind up in prison, but he might wind up out a lot of money. As you probably heard, and this might be confusing and we'll try to explain it, the presiding judge in this case has already ruled that Trump and his co-defendants at The Trump Organization are liable for fraud.

Here now to explain, Nia Prater, staff writer covering New York politics for New York Magazine's Intelligencer. Nia, thanks for coming on with us. Welcome to WNYC.

Nia Prater: Thank you so much for having me on. I'm happy to be here.

Brian Lehrer: Let me just jump in on is Trump using any kind of defense like, "Come on. All the kids do it"? Meaning big real estate moguls and maybe lots of other corporate types often lowball their properties' worth to the IRS, but maximize how they estimate when they're applying to banks for loans.

Nia Prater: [chuckles] Yes. Essentially, Trump's legal team is arguing that valuations of properties can be subjective. That two different parties coming away with different values for a property isn't inherently fraudulent and is very common in the real estate field. Now, it remains to be seen how effective that argument is. Attorney General Letitia James is essentially alleging that Trump and his company inflated the values of his properties with the intent of receiving more favorable terms on, let's say, financial loans.

She's claiming that similar units and similar properties were valued much lower than the values that Trump and his company submitted. We could [crosstalk]-

Brian Lehrer: Right.

Nia Prater: -is that an effective argument or not remains to be seen.

Brian Lehrer: Why isn't this criminal as opposed to merely a civil case for monetary damages if it's basically stealing a lot of money? If I swipe some lipstick from CVS, that's a criminal case. This is merely civil with so much money at stake. Why is that?

Nia Prater: When the attorney general first filed this lawsuit back in September 2022, she essentially said that her office lacked the authority to file criminal charges. I guess if other city prosecutors wanted to take this up that would be under their purview, but seemingly no one else picked it up, so it's remaining a civil matter, at least for the time being.

Brian Lehrer: Listeners, we can take some phone calls about Trump's civil corporate fraud case going on in New York now. 212-433-WNYC, 212-433-9692. I know there are a number of counts, and the judge already found him guilty on one of those. Can you unpack that for us a little bit? This is a bench trial, meaning it's a judge, not a jury. My understanding is the Trump side requested that it be a bench trial, a judge rather than the jury. Now of course they're saying this judge hates Trump, and that's why he's coming down with any ruling that Trump doesn't like.

What did the judge already rule on as so indisputable that he was able to just give a-- what's called summary judgment? What's left that he thinks is open to question enough that they're actually having a trial?

Nia Prater: Sure. Last week the judge in the case issued a ruling essentially saying that Trump and his fellow defendants have been found liable for fraud. Essentially that the attorney general has proved that aspect of her case. In part of that ruling, he also ordered the operating licenses for Trump's various other LLCs to be rescinded, and in the meantime, have those companies managed by independent monitors. That leaves open the future of Trump's various holdings in the city, including the iconic Trump Tower and all of these other things.

As part of that ruling, he had the opportunity to say, "I've seen enough. We don't have to go to trial," but he determined that the other claims being made by the Attorney General's Office, including falsifying business records and insurance fraud, he determined that a trial should go forward to decide upon these matters, and also any other potential penalties that could come out of this.

Brian Lehrer: You know what else I wonder about this? How can these big banks that Trump wants to borrow money from be so easily fooled by him about his properties' properties and their net worth? These are the masters of the universe, aren't they? Don't they vet claims like these at this level of prominence like Trump Tower as routine due diligence with all their money?

Nia Prater: Well, I suppose that's probably the bigger question. I guess we could wonder if maybe there are some different behaviors that have to be enacted at a higher level or maybe different legal statutes. I think it's fair to say that Trump's own reputation preceded him. He has this reputation of being such a successful businessman and having this lucrative career in real estate for many, many years. I suppose it's possible that we're more likely to put our trust and our faith in these more well-known figures than, say, some average person, let's say.

Brian Lehrer: I guess, though he already had a reputation before he entered politics.

Nia Prater: Very true.

Brian Lehrer: How do outside appraisals compare, if you can give us one or two specifics, to Trump's valuations of his properties? What does that reveal about his claims of inflated net worth?

Nia Prater: There were examples of, let's say, different units in various apartment buildings where a comparable unit would receive one valuation. Say it's a two-bedroom, one-bath, for example. Then a similar unit would for some reason receive a higher number despite being fairly identical. Though I don't have the figures in front of me, these are pretty much the examples that Letitia James has given in her filing. Just to say that even though they sought out these other outside appraisals to say this property is worth X, she found that in subsequent filings, and particularly to banks and insurance firms, that the numbers were in fact much higher than the evidence would state.

Brian Lehrer: One of the reasons, as I understand it, that the judge ruled even before hearing arguments from both sides on that one count last week is because there were so many facts that were not in dispute that proved some kind of fraud. Like Trump, from reporting I've heard, lied about the number of square feet in one or more of his buildings. That's a matter of fact that can be fact-checked, not a matter of subjective valuation of something, for example. Do you know matters of fact that Trump got caught on telling lies in these documents?

Nia Prater: Well, there's been a few instances where the judge seemingly hasn't really bought into Trump's legal arguments, which begs the question of why his legal team sought to-- or at least didn't seem to pursue a jury trial in this matter. At the end of the day, the judge is going to be the final say in this entire case. At the same time, we see that we have the president railing against the judge in this case in front of TV cameras and even on social media. It's a very interesting legal strategy, to say the least, because based on the evidence that we have, it seems fairly likely that the judge isn't particularly leaning towards Trump's favor, at least at the moment.

Brian Lehrer: Here's an example of something that was deemed factually incorrect and purposely misleading on the facts. This is from the attorney general's press release, originally in this case about Mar-a-Lago. It says, "This property was valued as high as $739 million based on the false premise that it was unrestricted property and could be developed and sold for residential use even though Mr. Trump himself signed deeds donating his residential development rights sharply restricting changes to the property and limiting the permissible use of the property to a social club."

It goes on, "In reality, the club generated annual revenues of less than $25 million and should have been valued at closer to $75 million rather than $739 million."

That was a little dense, maybe a little bit in the weeds, listeners, but it goes to the allegation that he wasn't only lying about things that might be written off as a matter of interpretation, but there was this actual deed that Trump signed restricting any future use of the property in ways that meant that the future owners couldn't sell it for development in the way that he was claiming they could.

Nia Prater: Exactly.

Brian Lehrer: Just an interesting fact. Go ahead.

Nia Prater: Yes. Oh, sorry. That's why there's a lot of observers that are wondering if-- The facts of this case seem to be pretty straightforward. Is that why Trump is taking the time to appear in court and to be in front of the cameras as a way to emphasize his argument that he is being unfairly treated and this is only one of the many legal matters that he's going to be involved with coming into the next year. That maybe knowing that this case might not go his way, then maybe there is a way that he could use it to his political advantage with the 2024 election looming, and also, the four legal indictments that are also looming overhead.

Brian Lehrer: Let me get in a couple of caller questions real quick before we run out of time. Carol in Spring Lake, you're on WNYC. Hi, Carol.

Carol: Hi. Long-time listener, first-time caller. Thank you for having me.

Brian Lehrer: Sure.

Carol: I have a question in terms of who suffered as a result of this fraud, and also are they comparing the valuations for his loans against the valuations in his taxes?

Brian Lehrer: Great questions. Were there victims? Did banks or anyone else lose money as a result of this alleged fraud?

Nia Prater: Well, that is one of the arguments that Trump's legal team is making. Essentially, money changes hands every time in the real estate field and sometimes, you might make more money than you think you might, and you might lose more money than you thought that you would. That's one of the arguments that is essentially a "victimless," well, I won't say crime, but in this instance, if there was any sort of disagreeable action that maybe no one was harmed by it.

Now, I guess one could argue that that's not necessarily the point. That laws exist, and regardless if there's no victim, that doesn't mean that they shouldn't be enforced. It will be interesting to see the judge's take on that, but that is definitely one argument that Trump's legal team is making.

Brian Lehrer: Is there IRS interest in these documents for related reasons that you know of?

Nia Prater: I'm not too sure. I know that this is mostly a state and civil matter, so I guess they'll have to make that determination for themselves. At the moment, this is mainly just on the state level.

Brian Lehrer: Bud in Manhattan, you're on WNYC. Hi, Bud.

Bud: Hello. Hi. Thank you very much. Ms. Prater, do you believe that given the way this civil trial is going or perceived to be going, do you think Alvin Bragg regrets dropping his investigation, which was essentially on the same theory, false documents?

Brian Lehrer: Bud, that would've been a criminal charge. Any reporting to indicate that and are they the same case?

Nia Prater: Well, I wouldn't presume to know what the district attorney thinks on this matter and whether there's any regret involved. Prosecutors decide to try cases and not to try cases for a whole host of reasons. Just because one prosecutor might see a case where another does doesn't mean-- Sometimes it's just a difference in how one practices.

Brian Lehrer: Last thing in our last minute, is there some kind of corporate death penalty in play? Is the judge actually saying because of the fraud he already found that the Trump organization may not do business in New York, and have you ever heard of such a thing before?

Nia Prater: [chuckles] It remains to be seen. As part of this case, Attorney General James, she's seeking to permanently bar Trump and his children from operating a business in New York State as well as barring Trump from purchasing any real estate in the state for five years. I think that's a part of what will be determined in this case, ultimately. The judge will have to decide [crosstalk].

Brian Lehrer: What would happen in that scenario? Would they have to sell Trump Tower and all the other properties?

Nia Prater: That's the big question. If he's no longer able to operate and as well other actual penalties, for example, the Attorney General is seeking a $250 million fine, and of course there could be additional financial fines on top of that. It's certainly a possibility that in order to pay those penalties off that there might have to be some movement in his real estate portfolio.

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Brian Lehrer: Nia Prater, staff writer covering New York politics for New York Magazine's Intelligencer. So much 411 there. Thank you very much for digging so deep.

Nia Prater: Thank you so much, Brian.

Brian Lehrer: Brian Lehrer on WNYC. Stay tuned for Alison.

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