White Collar Crime News

Did Donald Trump commit fraud? March 7, 2009

When I speak with people about white collar crime, I  emphasize the blur between what is a white collar crime case versus a civil case.  In fact, I often say to a jury, this is just a civil case.  Quite often, the only difference is where the money went. 

Let’s look at Trump’s most recent failure.  Just a quick note, I like Trump so I don’t have a natural bias against him.  In 2006, Trump’s company was selling condo’s at Trump Ocean Resort Baja before construction on the property even began.  These pre-construction sales are not uncommon. In fact, 188 units were sold for $122 million in one day at a December 2006  event in San Diego.  Units for the Mexico property were selling for $300,000 to $3,000,000 and buyers had to put down 30%.

Fast forward to this year.  Trump removed his name from the property in January and now the project has folded.  The buyers are left with nothing.  No property, no refund.  Due to Mexican laws, there seems to be little recourse for the buyers due to the collapse of the project.  Regardless, there is nothing criminal about a bad condo project in and of itself. 

One issue I have is that these people probably didn’t know what they were doing.  One woman described the purchase as occurring in less than a minute.  There was also a herd mentality here as a large screen showed all the condo’s that were being purchased.  Everyone clapped after each sale.  They psychology at work there is fascinating. 

So, in the middle of all this chaos, I have to imagine that there were many important details that were left out.  Of course, this may be the buyer’s problem, or at worst, a civil issue.  However, if false information was given, that is fraud, and it seems like there was at least some.

In an October 2007 newsletter to buyers, Ivanka Trump assured them that all Trump projects were immune to a slowdown.  Of course, that sounds a lot like someone telling you that you can earn 10%+ every single year regardless of the economy.  If the state of the company was much worse but buyers were led to believe otherwise, they may have been able to demand their money back and/or prepare for the possibility of losing all of their money.

The other problem here is that this really wasn’t a “Trump” property.  Instead, it seems that Trump simply licensed his brand to another company. In fact, he wasn’t even an investor.  I doubt any of the buyers knew about this.  Of course, how can you blame them when Ivanka told the AP in 2007 that her father was the boss  when she was asked about her father’s role in the project.  She also said that he was involved in every capacity.  Of course, if he is just lending his name to make a profit, he may not be rather involved.

I’m not saying that Donald Trump, his kids or his company should be arrested.  I simply do not have that information and that is not my point.  The point is, how is what  his company did different from some other people that had businesses fail but are later arrested?  Sometimes  the company is more tightly controlled and you can show that the person running the company bought a new house, car, etc.  Thus, the inference is that this was a scam to enjoy the luxury lifestyle.  However, with a large company where no one person enjoyed an immense, direct profit, it is hard to pin down who profited and who is responsible.  Especially when the business is vast and the failing project was just a small part of the overall business.

Of course, I have many clients where the business failed, there is no luxary and yet, there is still an arrest.  In those cases, I think it comes down to who you are, who you know and whether the people who lost money have the means or ability to sue you.  When it is too late to file a lawsuit or too expensive, criminal courts are used as a collection agency or just to satisfy a need for revenge.  

Article is here.