Will Prez-Elect Trump Now Settle His Federal Racketeering Charges?

Popular Economics Weekly

Donald Trump, among his many court battles, has three civil lawsuits that accuse him, his eponymous school, the university’s former president, and an LLC behind the venture of fraud, breach of contract, false advertising and racketeering, a pattern of illegal activity — specifically mail and wire fraud — designed to defraud the public.

Judge Gonzalo Curiel, the U.S. judge overseeing two of the lawsuits against President-elect Donald Trump and his Trump University told both sides they would be wise to settle the case "given all else that's involved," reports Reuters.

Given that he is now President-elect, some are wondering why he doesn’t settle before the November 28 trial, which would reveal in detail that Trump University was a shell game—literally. It was a university in name only that didn’t confer degrees, for example, and Donald Trump is accused of running a criminal organization under RICO, The Federal Racketeer Influenced and Corrupt Organizations Act.

The latest development from a source familiar with the discussions says the White House-bound mogul’s legal team wants a global settlement that would end all three complaints, including a lawsuit brought by New York Attorney General Eric Schneiderman, according to the New York Daily News.

But “We are not going to settle this case out cheaply,” Patrick Coughlin, an attorney for the plaintiffs, told reporters last Thursday. So Trump’s allegedly fraudulent behavior could seriously damage his pocketbook, as well as he reputation.

The Trump University fraud trials have a 6-year history. Lawyers for the president-elect are squaring off against students who claim they were lured by false promises to pay up to $35,000 to learn Trump's real estate investing "secrets" from his "hand-picked" instructors. 

Instead, they were lured into maximizing their credit cards in what was characterized as a classic Bait and Switch scheme. Instead of professional courses in real estate investing that were personally supervised by Donald Trump, they were handed materials copied from other courses, and taught by instructors with no record of success, or any other qualifications.

And Donald Trump walked away with $millions. The underlying civil lawsuit names Trump as a defendant and claims his now-defunct Trump University defrauded students out of $40 million in course fees. The case was first filed in 2010 and covers a class of some 7,600 students in New York, Florida and California–that included veterans, retired police officers and teachers–but Trump personally received approximately $5 million of it, despite his claim, repeated in the Time Magazine interview, “that he started Trump University as a charitable venture.”

So Trump has good reason to fear the lawsuits over Trump University: They put a lie to a central plank of his campaign. The disappointed students suing him argue that Trump is not a wildly successful entrepreneur or a canny dealmaker but rather a fraudster who made promises he couldn't keep, said Time Magazine. The legal proceedings have already revealed the details of the Trump University scam. Thanks to an order from Curiel, they could also reveal a closely guarded secret: Trump's net worth.

Graph: Time Magazine

And now President-elect Trump is asking for Top-Secret clearances for his two sons and son-in-law Jared Kushner, who are being tasked to run his more than 200 business connections. No conflict of interest there? And when President, he will be in a position to appoint the next IRS Director, while his tax returns are being audited.

USA TODAY reports the overall ugly picture of his business practices that emerges goes far beyond Trump’s use of bankruptcy court, where debts can be forgiven or restructured depending on their category and type of federal bankruptcy filing. What’s most provocative about USA Today’s reporting, is how Trump has a longstanding pattern of ignoring his bills and walking away from debts owed contractors and employees.

“At least 60 lawsuits, along with hundreds of liens, judgments and other government filings reviewed by the USA Today Network, document people who have accused Trump and his businesses of failing to pay them for their work,” the newspaper wrote recently. “Among them: a dishwasher in Florida. A glass company in New Jersey. A carpet company. A plumber. Painters. Forty-eight waiters. Dozens of bartenders and other hourly workers at his resorts and clubs, coast to coast. Real estate brokers who sold his properties. And, ironically, several law firms that once represented him in these suits and others.”

It’s almost two weeks before his trial on the RICO charges is scheduled to begin on November 28. Trump probably will attempt to stall it into his Presidency, though Judge Curiel has said he is not inclined to do so. So we will get to see in more detail the sordid portrait of this man that some 60 million have elected to be our next President, or we may not, if he agrees to a settlement before then.
Either way, we hope it provides some justice to the 7,600 plaintiffs—many of whom lost valuable life savings—in chasing his con game.

Harlan Green © 2016

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

What, Now A Trump Recession?

Popular Economics Weekly

Economists are already warning that if President-elect Trump’s policies are enacted, such as initiating trade wars, or the wrong tax cuts, or even cutting back on social security and Medicare benefits, we could see another recession, similar to the Great Recession that occurred during GW Bush’s term.

Whether his policies can be enacted depends on several things, including his unpredictable behavior, and perhaps the outcome of his November 28 RICO trial in San Diego for running Trump University as a criminal enterprise. Judge Gonzalo Curiel has just ruled that Trump’s inflammatory campaign statements can be admitted as evidence in his trial.

The Bush recession was caused by too lax regulations that caused the housing bubble (by allowing excessive bank leverage), tax cuts that increased the budget deficit while we were fighting two wars, and then Greenspan’s Federal Reserve decision to raise interest rates 16 consecutive times to bust the housing bubble.

It’s terrifying what President-elect Trump will be able to do when he controls all three branches of government (as soon as he appoints a ninth Supreme Court Justice) and carries out his campaign pledges.

Carrying out his pledge to deport all aliens when there is already an outflow of immigrants will devastate agriculture, construction, and any other industry that relies on low-cost labor, for instance.

His promise to ‘fix’ Obamacare (or abolish it outright) will endanger health benefits for the 20 million now covered by it. This makes healthcare much more expensive, since it puts the uncovered back in Emergency Room care for serious illnesses, which puts the cost of their care back on the hospitals.

And as the New York Times reports, “This is going to be a president who will be the biggest regulatory reformer since Ronald Reagan,” Stephen Moore, one of Mr. Trump’s economic advisers said in an interview on Wednesday. “There are just so many regulations that could be eased.”

It could be everything from repeal of Dodd-Frank, the successor to the Glass Steagall Act that protected federally insured depositors from risky investment banking, to repealing environmental regulations that combat global warming, and not only abolishing Obamacare, but the current Medicare system as House Speaker Paul Ryan is threatening to do.

Graph: Marketwatch

And we are reaching full employment levels, which will surely mean the Fed will begin to raise short term rates in December. This is happening already in the bond markets, as evidenced by rising longer term interest rates in anticipation of a soaring budget deficit, if Trump’s plan to increase both infrastructure and military spending while cutting taxes is implemented.

The central issue, though, maybe Trump’s misbehavior in dissing those elements that made American great. “Trump’s bigotry, dishonesty and promise-breaking will have to be denounced,” said David Brooks today. “We can’t go morally numb. But he needs to be replaced with a program that addresses the problems that fueled his ascent.
“After all, the guy will probably resign or be impeached within a year. The future is closer than you think.”

But President-elect Trump’s destruction of almost all decency in his grab for overwhelming power has let that Genie of discontent out of the bottle. We know what happened in the 1930s and even earlier when such ruthless tactics were used.

Harlan Green © 2016

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Judge Tentatively Denies Dismissal of Trump RICO Charges

Financial FAQs

It looks like Donald A Trump will be on trial under RICO, or The Racketeer Influenced and Corrupt Organizations Act. A federal judge strongly indicated last Friday he would allow a lawsuit to move forward against Republican presidential nominee Donald Trump under RICO by former customers who contend they were defrauded by his defunct real estate program, Trump University, reports Greg Moran, for the San Diego Union-Tribune.

U.S. District Court Judge Gonzalo Curiel issued a tentative oral ruling from the bench at the start of a hearing in San Diego on a motion to dismiss the case by Trump’s lawyers. The ruling came a day after Trump accepted the GOP nomination at the Republican National Convention in Cleveland, said Moran.

RICO is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization, says Wikipedia. The RICO Act focuses specifically on racketeering, and it allows the leaders of a syndicate (such as a corporation) to be tried for the crimes which they ordered others to do or assisted them in doing, closing a perceived loophole that allowed a person who instructed someone else to, for example, murder, to be exempt from the trial because he did not actually commit the crime personally.

Curiel said that plaintiffs had met the legal requirements to move the case forward and have a jury decide it.  Trump “participated in a scheme to defraud” people who signed up for the seminars, some at a cost of about $35,000.

The complaint, filed in 2013 by former customer Art Cohen, is one of two class-action lawsuits that Trump is facing in San Diego over Trump University before the same judge. Trump also faces a lawsuit in New York.

The lawsuits allege that Trump University gave seminars and classes in hotel ballrooms across the country that were like infomercials, constantly pressuring customers to buy more and, in the end, failing to deliver. Cohen went to a three-day seminar in 2009 in Palo Alto, California, for $1,495 and bought into the "Gold Elite" mentorship program for $34,995.

But that may not be the most serious financial crime Trump is guilty of. He won’t release his tax returns, even though he has said he would in the past. And that means he could be hiding a whole lot of sins.

It’s been well-documented that Donald Trump has a history of promising to release his tax returns — and then not doing so. In 2011, when Trump was spearheading the movement questioning whether President Obama was born in the United States, Trump told ABC News that he would release his tax returns if Obama released his long-form birth certificate. “I’d love to give my tax returns,” he said, in the ABC interview.

But once Obama released his birth certificate, Trump hedged. “At the appropriate time I’m going to do it,” he said. The appropriate time never came.

Then, in 2012, Trump criticized Republican presidential nominee Mitt Romney for being slow to release his tax returns. Trump was asked by Fox News whether he’d ever have a problem releasing his returns.

“No,” he said. “I actually think that it’s a great thing when you can show that you’ve been successful, and that you’ve made a lot of money, that you’ve employed a lot of people. I actually think that it’s a positive.” But again, he refused.

This is even though such Republican luminaries as former GOP presidential nominee Mitt Romney has criticized Donald Trump for failing to disclose back taxes, repeatedly suggesting that the billionaire’s financial records may contain “a bombshell” that could damage his White House bid.

“I think we have good reason to believe that there’s a bombshell in Donald Trump’s taxes. I think there is something there,” Romney said on Fox News’ “Your World” with Neil Cavuto. “The reason I think there is a bombshell in there is because every time he is asked about his taxes, he dodges and delays.”

What could he be hiding? The first thing the public would find is Trump's tax rate. The candidate has bragged about paying a very low tax rate and taking advantage of the complex US tax code with its many loopholes. This is what Romney’s tax returns revealed—that he paid a lower tax rate than his secretary.


Then there is the much-publicized claim that he has a net worth of “billions”, even ten billion, he has claimed most recently.  This would be hard to ascertain from tax returns alone, as they report income rather than assets. Tax expert David Cay Johnston has uncovered past audits of Donald Trump from the 1980s and 90s that show no income at all, but lots of undocumented expenses.

In fact, Trump’s taxes may have been fraudulently filed, in some cases.  When shown a photocopy of Trump’s 1984 tax return during an appeal, Jack Mitnick, Trump’s accountant for more than 20 years, testified that “we did not” prepare that return, referring to himself and his firm, and he said did not know who did. However, Mitnick did not dispute that it was his signature on the photocopy.

The original tax return was never found, the judge noted.  “Among the issues raised by Mitnick’s 1992 testimony is whether Trump or someone acting on his behalf substituted a return that he or someone else prepared and then transferred Mitnick’s signature using a photocopier,” said Johnston.

So the fact that Trump is worth "billions" would be hard to ascertain from tax returns alone.  But his repeated promises to release his taxes, and then refusing to do so, should be a red flag to voters. What is he hiding that he is willing to break the precedent of every President since Richard Nixon to release their taxes and that will further damage his reputation for truthfulness?

We should know within days what Judge Curiel’s verdict will be on Trump’s RICO indictment. It doesn’t look good, needless to say, as he could be convicted of a felony, which would be grounds for impeachment should he be elected President.

Harlan Green © 2016

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen