N.Y. fraud law that punished Trump was a Republican idea

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Former President Donald Trump argues that New York’s special consumer protection law—which resulted in a nearly $500 million verdict against him—was “very unfair.”

His attorneys claimed the law was “a tyrannical abuse of power” that threatened America’s economic prosperity.

Richard A. Dollinger

In short, if you believe the former president and his attorneys, the law was concocted by corrupt-minded political opponents, vengeful Democrats or left-wing socialists, eager to sabotage economic freedom and prosperity.

They must have missed one fact: This law was, in every critical detail, a Republican idea generated by his own political party—stem to stern—right from the start.

The law that Trump and others violated is Section 63(12) of New York’s Executive Law. It allows the New York attorney general to seek judicial intervention for “repeated fraudulent or illegal acts” that “demonstrate persistent fraud or illegality.” The law provides broad injunctive power to close offending businesses and permits damage awards against violators.

Far reaching as it may appear, it was a Republican-driven statute.

The author of the proposed statute was Republican Attorney General Jacob Javitz. In 1956, Javitz proposed giving the state the power to end “consumer frauds” and fraudulent practices like “bait advertising.” According to the Senate sponsor, Republican Sen. Bernard Tompkins, the bill would strengthen “the legal remedies available in such cases, in view of the continued widespread incidents of consumer frauds, so costly to consumers and honest business alike.”

The statute moved quickly through the Republican-dominated state Legislature in 1956.  Republicans in the Assembly held a 90-60 advantage. In the Senate, the GOP held a 35-26 majority. The bill sailed through the Republican Legislature without opposition.

Proponents lobbied the governor for a signature. The New York City Better Business Bureau in its letter to Gov. Averell Harriman on April 3, 1956, advocated an approval, as did the governor’s own consumer counsel, who noted that the new law would “put a stop to contributing practices of deceit and fraud by business.”

The New York State Bar Association opposed the bill because it was drafted “in too loose a manner” and argued, in advocating a veto, that that the description of “fraud” to was too broad and ill-defined. 

The only official to oppose the bill was then Comptroller Arthur Levitt, a Democrat. His department argued that the broad authority in the bill was “too expansive” because a “mere preponderance of the evidence” would be sufficient to establish the illegal fraud and result in the closure of a business “without a criminal conviction for any wrongdoing.” The bill authorized perpetual punishment of individuals without evidence or regard to the inherent dangers to the general public of the business activity involved, Levitt argued.

Harriman approved the new law in April 1956, after every Republican in the Legislature voted in favor of it.

The law was broadened by later legislatures, all with unanimous Republican support. In 1965, the Legislature expanded the scope of fraud to include “any device or scheme or artifice to defraud” as well as any “deception, misrepresentation concealment or false pretense.”   Republican Attorney General Louis Lefkowitz proposed the change. A Republican senator sponsored the bill. Every member of the Senate and Assembly—including all the Republicans— voted in favor the bill. Republican Gov. Nelson A. Rockefeller signed it into law.   

In 1970, the Legislature, in another bill proposed by Republican Attorney General Lefkowitz, added language that the court could order restitution against a persistent fraudster. The GOP controlled both houses of the Legislature and unanimously supported adding the restitution language. Rockefeller signed the bill into law.

In 1977, again at the behest of GOP Attorney General Lefkowitz, the Legislature added the provision that resulted in the large damage award against Trump. Chapter 539 of the Laws of 1977 gave courts the power to “direct damages” for violations of the law. By this point, the Assembly had a Democratic advantage, 90-60. But the state Senate was still Republican by a 36-24 margin. The bill passed both houses unanimously. Then Gov. Hugh Carey, a Democrat, signed the bill into law.

As Judge Arthur Engoron wrote in his opinion in the Trump case, “the statute casts a wide net.”

Over the last 70 years, every Republican who had a chance to vote against this far-reaching anti-fraud law chose instead to more thoroughly punish those who engaged in persistent fraud in New York as the court found the former president did in his recent trial.

Whatever complaint Trump and his attorneys may have against New York’s anti-fraud law, it is best aired to members of his own political party. 

The Hon. Richard A. Dollinger (Ret.) is a retired member of the New York Court of Claims and a former member of the New York State Senate.

The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. Submissions to the Letters page should be sent to [email protected]

6 thoughts on “N.Y. fraud law that punished Trump was a Republican idea

  1. I was shocked to see The Beacon editorial aimed directly into politics. Further it is great to see the robust input here. I’m a scientist, and love economics, finance and the rule of natural law. Laws are mostly written by lawyers and lawyers mostly interpret laws and lawyers argue against other lawyers which certainly indicates that there is uncertainty in the law as written and interpreted by qualified lawyers on both sides. So we need better laws and the bad ones that are still “on the books” should be abandoned or in a legal way “gotten rid of” . Loop holes in laws or undefined terms should be defined and understood when the law is written and agreed to so as to eliminate misapplication of the law which can eventually lead to a lot of scarce mental resources being used instead of focusing on other more important issues humanity needs to work on. Bad or misapplied laws lead to a waste of scarce resources!!

  2. Excellent and insightful article on Trump and his current debacle due to legislation devised by the very party that is now willingly bending the knee and kissing his ring. When you do not stand for something you will fall for anything. At least Republicans are consistent. Inability to govern, a do nothing attitude, and lack of a moral compass are a few of the GOP character flaws. As a broken and deeply flawed individual, Trump is like a cornered rat trapped by his own doing. He should have known better than to cheat, lie, and steal as Congress hates the competition. Keep digging Donald as you do know the difference between a rut and a grave. It’s the dimensions.

  3. Rick,
    Your detailed examination of the Republican origins of New York’s anti-fraud law provides valuable insight into its bipartisan foundation. However, I believe that in the case of Trump, there’s evidence to suggest that the law has been misapplied, particularly by the left-leaning district attorney and judge.
    While it’s crucial to recognize the law’s bipartisan support and intention to combat fraud, its application in Trump’s situation seems to deviate from its original purpose. Trump, like many in our industry, seeks to present property values favorably. The fact that banks accepted his valuations suggests a level of legitimacy.
    The banks’ willingness to lend money based on Trump’s appraisals adds another layer of complexity to this issue. Their approval implies a level of trust in Trump’s evaluations, further challenging the notion of fraudulent intent.
    The disagreement between Trump’s appraisal and the judge’s ruling doesn’t automatically imply fraudulent behavior on Trump’s part. Property valuation is inherently subjective, and differences in opinion are common. Therefore, it’s essential to question whether the judge’s assessment truly reflects fraudulent intent or is influenced by other factors.
    Additionally, it’s crucial to consider the impartiality of those involved in legal proceedings. If there are legitimate doubts about the neutrality of judges and district attorneys, it raises concerns about the integrity of the entire process.
    In summary, while the origins of the law may be bipartisan, its application in Trump’s case appears to have strayed from its intended purpose. This deviation, coupled with concerns about impartiality, warrants a closer examination of the legal proceedings.
    Thank you for fostering this dialogue, and I look forward to further discussions on this matter.

  4. I tire of pitting one party against the other as opposed to coming together for the common good. It accomplishes nothing. It does create a greater divide. Each side hurling rocks at the other. And our enemies laugh. They simply sit back and watch us destroy ourselves. There are no Statesmen left in this nation, just highly politicized professional politicians, Judges, a politicized justice department, a politicized FBI, etc. If you even think about being yourself the opposition will chew you up and spit you out. When it comes to defending yourself, the one with the most attorneys wins. How many attorney are “working” on behave of Hunter Biden? (40 to 50) If you can’t afford an attorney one will be assigned to you. One and not the sharpest tack in the toolbox. Equal justice? Not really. Common sense has left the room. My time is mostly spent, but I have kids and grandkids and I fear for them. There comes a point of no return and we a dangerously close to imploding. Semper Fi.

  5. The prosecution of President Trump under this statute is illegal, not “far reaching”. No violation by President Trump took place. The indictment must show clear evidence of a crime but it does not.
    It is not the statue that is the problem, as Dollinger claims. The problem is the prosecutor who violated this law. This Prosecutor’s campaign promise “to get Trump” is a clear statement of this illegal intent. The even-handed administration of justice is legally required, and biased application of justice is a criminal act.
    Worse, this blatant evidence of a corrupt New York judiciary threatens the commercial viability of NYC and NYS. No investors seek business opportunities in a jurisdiction that will arbitrarily and capriciously seek to confiscate private property. As an example, global investments in China have withered as the CCP confiscated private assets.
    I view this D0llinger “Guest Opinion” in the Beacon as politically inspired with an intent to interfere with the 2024 election and so it has no place in a publication that purports to be an unbiased representation of community opinion. Without proper reporting by the Beacon as such, it appear to be a violation of campaign finance laws. Not an attorney, just my lay understanding. I would be happy to be proven wrong.

  6. Presuming this is a true chronology, you had to go back to the 1950s to make your point? Jacob Javits was a liberal Republican (fr the Rockefeller wing) at best he’d be a lefty Democrat if he was around today. You conveniently left out (for the historically challenged among us) that then Gov Averell Harriman was a huge Democrat (Ambassador to Moscow for FDR, was in the room for the Yalta conference disaster in 1945) and advisor to LBJ to name a few highlights on his resume. If its a bad law, it doesn’t matter what party enacted it (even back in the 1950s). Its even a worse law if politicians abuse it to prosecute their political opponents. The law ought to be applied to assessments in Western NY, I know first hand examples over the years where the assessed value was well above resale value of the property. Ms Leticia instead of running up billable hours chasing political ghosts w/ no results, like the Gov Cuomo sexual harassment charges, the Kodak insider trading allegations, (both efforts got nowhere) , now she is going to prosecute on the basis of property valuation in NY? That is fertile ground, she just is in the wrong place, she needs to scrutinize the Assessors. I’m not much on predictions but I’ll make one, I’ll bet Ms Laticia has made enough enemies in her ‘prosecute everyone ‘ quest to be Governor, I’ll bet she has enough skeletons in her closet to end up like Elliot Spitzer……

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