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N.Y. Lawsuit Against Trump Trump Sued for Fraud Read the Lawsuit The Political Backdrop Understand the Case The Trump Investigations

Trump Is Battling a New York Law

Used to Take on Corporate Giants
The lawsuit filed this week by the state’s attorney general, Letitia
James, is based on the same statute that was used against Exxon
Mobil, Juul and UBS.

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Attorney General Letitia James of New York described the “broad and special powers”
she is granted by a state law aimed at reining in corporate malfeasance. Hiroko
Masuike/The New York Times

By Ben Protess , William K. Rashbaum and Rebecca Davis O’Brien

Sept. 23, 2022, 4:35 p.m. ET

For decades, the New York attorney general’s office has relied on a
little known but powerful law to take on what it sees as the most
egregious corporate malefactors, including oil producers, big
banks, tobacco companies and Martin Shkreli. Now this dubious
club has a new member: Donald J. Trump.

The attorney general, Letitia James, sued the former president, his
family business and three of his children on Wednesday, accusing
them of lying to lenders and insurers by fraudulently and
extravagantly overvaluing his assets — to the tune of billions of
dollars.

Like thousands of earlier actions by the attorney general’s office —

including those against the oil giant Exxon Mobil, the global bank
UBS, the tobacco company Juul, and Mr. Shkreli and his former
pharmaceutical company — Ms. James’s lawsuit against the
Trumps hinges on a muscular law that provides her office with an
upper hand when investigating and punishing corporate
wrongdoing.

The law, enacted nearly 70 years ago when Jacob K. Javits was
New York’s attorney general, has become a mainstay of the office.
It has been central to a wide range of recent civil actions that have
reaped hundreds of millions of dollars in settlements.

Ms. James’s lawsuit is not Mr. Trump’s first run-in with this
particular statute; her predecessors employed it in legal actions
against his for-profit education venture, Trump University, and his
family charity, the Trump Foundation, both of which paid millions
of dollars to resolve the cases. (The foundation was also dissolved).

Donald Trump was required to sit for questioning by the attorney general through a
law that allows the office to conduct a deep investigation before a lawsuit is
filed. Brittainy Newman for The New York Times

Mr. Trump has denied all wrongdoing in the latest case and
accused Ms. James, a Democrat running for re-election, of carrying
out a politically motivated “witch hunt.”

The statute, known as Executive Law 63 (12), sounds more like an

arcane ordinance than a powerful cudgel against corporate
malfeasance. And yet, it provides the attorney general with an
unusually broad legal arsenal to investigate businesses and people
involved in “persistent fraud or illegality.”

At a news conference on Wednesday announcing the case against

Mr. Trump and his family business, Ms. James noted that the law
“gives the attorney general broad and special powers.”

“It is a very powerful statute,” said David Nachman, who brought a

number of cases that cited the law during his 10 years at the
attorney general’s office, including a sprawling suit against the
opioid companies. Mr. Nachman is now a visiting lecturer at Yale
Law School.

Understand New York State’s Civil Case Against Trump

An empire under scrutiny. Letitia James, New York State’s attorney general,
has been conducting a yearslong civil investigation into former President
Donald J. Trump’s business practices, culminating in a lawsuit that
accused Mr. Trump of “staggering” fraud. Here’s what to know:

The power, he said, stems largely from a relatively low bar to

proving fraud. In these cases, the attorney general’s office does not
have to show that defendants intended to defraud anyone or that
their actions resulted in any financial loss. It can make a case Editors’ Picks
based solely on significant misrepresentations or deceptive
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The law also requires defendants to disgorge their ill-gotten gains,
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settlement negotiations before a case goes to trial. The lawsuit a (Different)
against Mr. Trump seeks the $250 million that it contends he Generation

reaped through his deceptions.

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And the statute affords the attorney general’s office — the only Animal Cafes

agency empowered to bring cases under the law — substantial

authority to investigate companies before suing them. While
plaintiffs in a typical civil dispute cannot collect documents or
conduct interviews until after filing a lawsuit, “63 12” empowers
the attorney general to issue subpoenas, conduct depositions and
do other digging upfront, before deciding whether to sue.

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With Mr. Trump, Ms. James questioned him under oath, but he
refused to answer her questions, invoking his Fifth Amendment
right against self-incrimination, a fact highlighted in her lawsuit
against him.

“The conduct alleged in this case is tailor-made for the statute,”

said Harlan Levy, who served as chief deputy attorney general
from 2011 to 2015.

Most of those accused under this law choose to settle, but at trial, it

has had mixed results in recent years.

In 2019, following years of bitter litigation and a 12-day civil trial, a

Manhattan judge ruled in favor of Exxon, finding that the attorney
general’s office had failed to prove that the oil giant had committed
fraud in the company’s public representations about climate
change. The complaint — which the judge called “hyperbolic” in his
ruling — was filed in 2018 by Ms. James’ predecessor, Barbara D.
Underwood.

Exxon in turn sued the state in federal court, in part on the grounds
that the investigation was politically motivated. The court tossed
out the case, and a higher court dismissed the appeal earlier this
year.

Exxon is not unique in leveling claims of political motivations — a

common accusation in politically sensitive cases brought by the
attorney general’s office, not just those involving “63 12.”

In 2005, then-Attorney General Eliot Spitzer used the law to sue

the insurance giant American International Group and its leader,
Maurice R. Greenberg, who in turn accused Mr. Spitzer of
leveraging the case to bolster his political career.

Mr. Trump had also attacked Ms. James’s predecessors when they
came after him using “63 12.” In 2013, then-Attorney General Eric
Schneiderman filed a lawsuit against Trump University, the for-
rofit education venture, calling it a yearslong “bait-and-switch”
operation. Mr. Trump’s legal team called the investigation
“politically motivated” and a “tremendous waste of taxpayers’
money.”

After fighting the case for years, Mr. Trump resolved the matter in
2016 with a $25 million settlement.

In response to Ms. James’s case, Mr. Trump’s company said this

week that her action was the product of “politics, pure and simple.”
Mr. Trump has also called Ms. James, who is Black, a “radical left
racist.”

Mr. Trump sued Ms. James in federal court late last year seeking to
block her investigation, citing critical statements she made about
the then-president during her first campaign for attorney general.

For her part, Ms. James noted at the news conference on

Wednesday that the courts had rejected Mr. Trump’s claims,
clearing the way for her lawsuit accusing Mr. Trump of lying about
the value of his properties to secure favorable loan terms and
insurance premiums.

Her lawsuit, she said, “demonstrates that Donald Trump falsely

inflated his net worth by billions of dollars to unjustly enrich
himself and to cheat the system, thereby cheating all of us.”

Ben Protess is an investigative reporter covering the federal government, law

enforcement and various criminal investigations into former President Trump and his
allies. @ benprotess
William K. Rashbaum is a senior writer on the Metro desk, where he covers political and
municipal corruption, courts, terrorism and law enforcement. He was a part of the team
awarded the 2009 Pulitzer Prize for Breaking News. @ WRashbaum Facebook •

Rebecca Davis O'Brien covers law enforcement and courts in New York. She previously
worked at The Wall Street Journal, where she was part of a team that won the 2019
Pulitzer Prize in National Reporting for stories about secret payoffs made on behalf of
Donald Trump to two women.

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