State of New York vs Trump, et al - the civil fraud case against the Trump Organization

[Foggy]

Oh wait, idea :

We add up all the loans he has out (my favorites are the Russians, they're very nice about you owing them money you don't have), and all his other debts, and then ... I learned about this in 2008 ... you carve them up into sumpin' called "tranches" and sell them on Wall Street, it's genius!

I mean, if'n you can do that with crappy, worthless real estate loans, surely you can do it with Trump!

No thanks are necessary, I do it for the children.

[RTH10260]

Mortgage backed securities? The banks may be happy to have handed the risk on. Or they are all too scared and each is waiting for the other to twitch with the eyebrow and shoot first. As long as the T empire keeps their interest payments up they will not move. Who has the first loan due?

[Reality Check]

I mean, if'n you can do that with crappy, worthless real estate loans, surely you can do it with Trump!

No thanks are necessary, I do it for the children.

Something about Trump being carved up into tranches pleases me.

Oh wait. You meant his loans.

[realist]

So WHY have all the banks that have outstanding loans to Trump or the Trump Organization not called in those loans, after it has been credibly alleged that the loans are based on phony valuation of the collateral?

Those loans aren't improving. Who's going to be last to pull any money out of the crumbling edifice?

If the repayment terms of the loans are being met, why would they? Get all they can while they can.

[neonzx]

So WHY have all the banks that have outstanding loans to Trump or the Trump Organization not called in those loans, after it has been credibly alleged that the loans are based on phony valuation of the collateral?

Those loans aren't improving. Who's going to be last to pull any money out of the crumbling edifice?

Perhaps because they know and knew they were complicate ?

[noblepa]

So WHY have all the banks that have outstanding loans to Trump or the Trump Organization not called in those loans, after it has been credibly alleged that the loans are based on phony valuation of the collateral?

Those loans aren't improving. Who's going to be last to pull any money out of the crumbling edifice?

If the repayment terms of the loans are being met, why would they? Get all they can while they can.

If they lose faith in his ability or willingness to EVER repay the principle of those loans, and if the assets behind them are worth far less than Trump claimed they were, some of the lenders may want to call their loans sooner, rather than later, even if Trump is making the contractually required minimum payments. They may wish to get THEIR money back while he still has enough to pay THEM and to hell with the other creditors. If they wait until he actually defaults, there may not be enough value in the assets or money in Trump's bank accounts to pay more than a fraction or what they are owed.

IANAL, but it is my understanding that, absent a bankruptcy filing, creditors are paid on a first-to-file basis. That is, the first to file a lawsuit gets paid the entire amount owed. By the time you get to the last creditor, there probably isn't anything left, so they get nothing.

OTOH, once a bankruptcy is filed, every creditor is on an equal footing. The debtor's total assets are divided up on a pro-rated basis to pay all the creditors the same fraction of what they are owed.

IOW, without bankruptcy, the first creditor to sue gets 100% of what they are owed, while the last to file may get nothing. With a bankruptcy filing, all the creditors may get 10%, 20% or whatever assets the debtor has.

[Foggy]

I haven't gotten too deep into the weeds, but I think a lot of loans have clauses for if the borrower is in legal trouble, but dig it:

If the repayment terms of the loans are being met, why would they? Get all they can while they can.

OK, just as an example, and I'm learning here too also, let's say you loaned Trump $100 million using the beautiful Mierda Lardo property as collateral, with a valuation of $738 million or whatever it was, but now a lawsuit has been filed in New York that says the collateral for your $100 million loan is only worth $75 million.

Even if Trump is making the monthly payments on the loan, don't you kind of want out of the deal?

Maybe not - the collateral is under water, but he IS making the payments.

If they decide they want out of the deal, the fact that the loan is specifically mentioned in a $250 million lawsuit might be enough to call the loan, yesno?

[Suranis]

They are not going to because to admit that he has fuck all money means that they have to admit there is a massive hole blown in their on paper assets, so their stock price craters and more importantly their "coke and hookers" obsessed management lose their bonuses. So they will pretend they will get their money back so their assets are still what they say they are.

It reminds me of the Mark to Mark accounting used by Enron to pretend they were flush, when in terms of actual cash they were well in the red.

Anyone with 2 neurons knows he is a black hole for cash, but it suits them to pretend he will pay them back.

[Mr brolin]

It would not surprise me one iota if a chunk of his loans are interest only payment plans with the principal to be paid on maturity.

He only pays the interest, waits until he's almost at the payment date then refinances it again based on the inflation and Trump inflated value AND does the equivalent of an equity line of credit to draw real valuta out whilst the whole pyramid staggers on until the next principal repayment cycle.

The financial equivalent of a perpetual motion machine as Donny keeps inflating the asset value based on his "feelings" which feeds the lifecycle.

The bottom feeders in finance will keep on feeding this as, to THEM, it's almost risk free. The nominal, imaginary asset valued loan a good margin between the perceived value and the loan value, they make all that lovely lovely money in fees and the like that will be backed loaded into the loan itself.

The next time the loan is maturing the NEW guys ('cause the old ones have all buggered off to the retirement location of choice) will look at the process their predecessors did, dust off the old PowerPoint Decks, rebadge them and do the same AS IT IS THEIR INTEREST TO KEEP THE MAGIC MONEY MACHINE WORKING.

[Uninformed]

[Foggy]

Yes, and of course there will also be new attorneys in the New York Attorney General's office, ready to go after the new guys you described.

[Gregg]

So WHY have all the banks that have outstanding loans to Trump or the Trump Organization not called in those loans, after it has been credibly alleged that the loans are based on phony valuation of the collateral?

Those loans aren't improving. Who's going to be last to pull any money out of the crumbling edifice?

Mutually Assured Destruction.

The first one to demand repayment (which come on, they will never get. Trump will just start a 5 year court battle) will pull them all down into having to eat the loss.

[Maybenaut]

I haven't gotten too deep into the weeds, but I think a lot of loans have clauses for if the borrower is in legal trouble, but dig it:

If the repayment terms of the loans are being met, why would they? Get all they can while they can.

OK, just as an example, and I'm learning here too also, let's say you loaned Trump $100 million using the beautiful Mierda Lardo property as collateral, with a valuation of $738 million or whatever it was, but now a lawsuit has been filed in New York that says the collateral for your $100 million loan is only worth $75 million.

Even if Trump is making the monthly payments on the loan, don't you kind of want out of the deal?

Maybe not - the collateral is under water, but he IS making the payments.

If they decide they want out of the deal, the fact that the loan is specifically mentioned in a $250 million lawsuit might be enough to call the loan, yesno?

Last time I took out a loan, the bank contracted an independent appraiser (although they made me pay for it); no way were they taking my word for the valuation. I don’t know how Trump managed to inflate the value without the bank’s knowledge. But maybe appraisals are for little people.

[Slim Cognito]

Roy Cohn, the one person trump actually listened to.

[raison de arizona]

[Slarti the White]

It would not surprise me one iota if a chunk of his loans are interest only payment plans with the principal to be paid on maturity.

He only pays the interest, waits until he's almost at the payment date then refinances it again based on the inflation and Trump inflated value AND does the equivalent of an equity line of credit to draw real valuta out whilst the whole pyramid staggers on until the next principal repayment cycle.

The financial equivalent of a perpetual motion machine as Donny keeps inflating the asset value based on his "feelings" which feeds the lifecycle.

The bottom feeders in finance will keep on feeding this as, to THEM, it's almost risk free. The nominal, imaginary asset valued loan a good margin between the perceived value and the loan value, they make all that lovely lovely money in fees and the like that will be backed loaded into the loan itself.

The next time the loan is maturing the NEW guys ('cause the old ones have all buggered off to the retirement location of choice) will look at the process their predecessors did, dust off the old PowerPoint Decks, rebadge them and do the same AS IT IS THEIR INTEREST TO KEEP THE MAGIC MONEY MACHINE WORKING.

Let me see if I've got this straight -- Trump gets a loan to buy a property (initial terms, down payment, yada yada yada) from someone who puts up actual money to give to the seller. Unlike the loans most of us are familiar with, he only pays interest and fees on this loan -- never paying down the principle. Right before the loan comes due, he finds another lender and, based on a higher valuation, gets a new loan with a different lender who pays off the previous lender (who is now cashed out having made a nice profit on their money over the term of the loan). Trump uses the working income off of the real estate to pay the fees (and support himself) and skims some off of the loan via something like an equity line of credit. As long as you can line up a new lender every time -- who believes in your increased valuation (or doesn't really care) -- then you can keep milking the property in perpetuity and no one really cares about the actual value of the asset -- just that its perceived value lasts long enough for them to cash out.

Is this basically it yes/no?

[Slim Cognito]

Is that how a Ponzi scheme works?

[northland10]

Passing around bad loans to get your profit and let somebody else have the risk is not unusual (did we forget the great recession). There are also a bunch of nice fees that lenders and such can charge. Find ways to keep the risk off your books, or at least spread out over a long period, and what do you care if the principal is ever paid.

[Slarti the White]

Is that how a Ponzi scheme works?

It seems to me (and I'm not a financial guy) that this is a linear scam while a Ponzi scheme is a pyramid. In other words, a Ponzi scheme depends on continually increasing the number of marks paying in so that you can pay off the marks from earlier (minus, of course, what you skim off). In this scam, you only have one lender at a time so (at least for each individual property) there isn't an ever-growing base of "investors" who will be screwed once the supply of new marks drys up. Unless, of course, you use your profits to buy other properties -- like by trying to build a real estate empire -- and keep increasing the size of your debt until (a) you can't find new lenders and go bankrupt (which, of course, has happened to Trump several times); or (b) you find lenders that aren't interested in making money but are very interested in the leverage they have over you.

Apropos of nothing, was it Eric or Donnie Jr. when asked about how they were getting their funding (on a Golf channel interview over a decade ago) said that they could get all of the money they needed from Russia? And why did a Canadian bank controlled by the Saudis pick up Jared Kushner's loan just a bit ago?

My question to Mr. Brolin is: if all of this is right, and Trump's lenders are no longer financial bottom feeders, but rather people who care more about having leverage on, say, someone who controls a large political cult of personality and had a position where he could embed a large number of partisan moles in a large federal government and might have that position once again, what happens when someone -- say a nice New York prosecutor lady -- comes along an drags everything out in the open?

Now I'm "just asking questions" based on speculation here, but if this were true, we might have seen some signs of it in the past. Oh, I don't know, something like someone who was known to be indebted to the Russian oligarchs planted at the highest levels of the Trump campaign so that these creditors could keep an eye on their asset and get insider data that they could use to engineer a massive disinformation campaign to help their pawn achieve high political office -- maybe even the presidency of the United States. *cough* Paul Manifort *cough*. Sorry, something in my throat there...

If this is all true, it would certainly explain why no one is interested in calling their loans -- they don't care about the money, they care about what they purchased with it: Trump. They want him to remain a viable candidate to reclaim the presidency as long as possible and do as much damage as possible to the United States if he is taken down.

But what do I know?

[raison de arizona]

Apropos of nothing, was it Eric or Donnie Jr. when asked about how they were getting their funding (on a Golf channel interview over a decade ago) said that they could get all of the money they needed from Russia? And why did a Canadian bank controlled by the Saudis pick up Jared Kushner's loan just a bit ago?

That was Eric.

Eric Trump tells author James Dodson, "We don't rely on American banks [...] We have all the funding we need out of Russia", and says, "We go there all the time"

About a year later he started complaining the quote was fabricated, but that is doubtful.

And isn't that odd about Jared? Hmm.

[Maybenaut]

It would not surprise me one iota if a chunk of his loans are interest only payment plans with the principal to be paid on maturity.

He only pays the interest, waits until he's almost at the payment date then refinances it again based on the inflation and Trump inflated value AND does the equivalent of an equity line of credit to draw real valuta out whilst the whole pyramid staggers on until the next principal repayment cycle.

The financial equivalent of a perpetual motion machine as Donny keeps inflating the asset value based on his "feelings" which feeds the lifecycle.

The bottom feeders in finance will keep on feeding this as, to THEM, it's almost risk free. The nominal, imaginary asset valued loan a good margin between the perceived value and the loan value, they make all that lovely lovely money in fees and the like that will be backed loaded into the loan itself.

The next time the loan is maturing the NEW guys ('cause the old ones have all buggered off to the retirement location of choice) will look at the process their predecessors did, dust off the old PowerPoint Decks, rebadge them and do the same AS IT IS THEIR INTEREST TO KEEP THE MAGIC MONEY MACHINE WORKING.

Let me see if I've got this straight -- Trump gets a loan to buy a property (initial terms, down payment, yada yada yada) from someone who puts up actual money to give to the seller. Unlike the loans most of us are familiar with, he only pays interest and fees on this loan -- never paying down the principle. Right before the loan comes due, he finds another lender and, based on a higher valuation, gets a new loan with a different lender who pays off the previous lender (who is now cashed out having made a nice profit on their money over the term of the loan). Trump uses the working income off of the real estate to pay the fees (and support himself) and skims some off of the loan via something like an equity line of credit. As long as you can line up a new lender every time -- who believes in your increased valuation (or doesn't really care) -- then you can keep milking the property in perpetuity and no one really cares about the actual value of the asset -- just that its perceived value lasts long enough for them to cash out.

Is this basically it yes/no?

That’s pretty much how interest-only loans work in general, but most only allow you to pay interest-only for a defined period of time, after which point you have to start paying both interest and principal. The amount of principal you’d have to pay would be more than if you had a conventional loan, so your loan payments at the end of the interest-only period would raise substantially. Also, some banks will require a rate adjustment and/or a balloon payment at the end of the interest-only period.

People will often refinance at the end of the interest-only period, but the only equity the buyer has in the property at that point is the difference between the purchase price and any increase in the market value (unless they voluntarily made additional principal payments).

So, it’s a thing, but it’s not for everyone.

[raison de arizona]

That’s pretty much how interest-only loans work in general, but most only allow you to pay interest-only for a defined period of time, after which point you have to start paying both interest and principal. The amount of principal you’d have to pay would be more than if you had a conventional loan, so your loan payments at the end of the interest-only period would raise substantially. Also, some banks will require a rate adjustment and/or a balloon payment at the end of the interest-only period.

People will often refinance at the end of the interest-only period, but the only equity the buyer has in the property at that point is the difference between the purchase price and any increase in the market value (unless they voluntarily made additional principal payments).

So, it’s a thing, but it’s not for everyone.

My mother-in-law had an interest-only loan on her house. At the end of five years there was a balloon payment, i.e. the entire loan came due. She is on a fixed income, and her plan was to only stay in the house a short (5 years or less) time, and then sell before the balloon payment came due. Instead she chose to stay, and had to refinance.

[Suranis]

That was Eric.

Eric Trump tells author James Dodson, "We don't rely on American banks [...] We have all the funding we need out of Russia", and says, "We go there all the time"

About a year later he started complaining the quote was fabricated, but that is doubtful.

It was also Don Jr in 2008. Which makes it even less likely the quote was fabricated. Jr said it to a real estate conference.

https://www.aol.com/article/news/2018/0 ... a/23367534

Donald Trump Jr. admitted a decade ago that many family assets come from Russia
Business Insider
Brennan Weiss
February 21, 2018, 4:16 PM

A decade-old quote by Donald Trump, Jr. resurfaced in a New York Times column over the weekend.

"In terms of high-end product influx into the US, Russians make up a pretty disproportionate cross-section of a lot of our assets," President Donald Trump's eldest son said during a conference in New York in 2008.

The comment has taken on new meaning since Trump's election.


During a New York real estate conference in 2008, President Donald Trump's eldest son admitted that a lot of the family's assets come from Russia.

"And in terms of high-end product influx into the US, Russians make up a pretty disproportionate cross-section of a lot of our assets," Donald Trump, Jr. said while speaking at a New York real estate conference in 2008. "Say in Dubai, and certainly with our project in SoHo, and anywhere in New York. We see a lot of money pouring in from Russia."

Amid special counsel Robert Mueller's Russia investigation, Trump, Jr.'s comments have taken on new meaning.

The curious quote resurfaced in The New York Times columnist Thomas Friedman's latest op-ed, published on Sunday, which tears into Trump and his handling of Russian interference in the 2016 election.

"President Trump is either totally compromised by the Russians or is a towering fool, or both, but either way he has shown himself unwilling or unable to defend America against a Russian campaign to divide and undermine our democracy," Friedman wrote.

[Sam the Centipede]

Pedantry/accuracy time!

A Ponzi scheme is not a pyramid scheme. A pyramid scheme requires investors at each level to pay an initial fee then to bring in more investors to recoup that fee (and optimistically more) as the fees for recruitment flow up the pyramid. Sales of the nominal product are insignificant to the functioning of the scheme. Investors recruit more investors, and the exponentially widening pyramid collapses when the supply of fresh marks dried up, as it inevitably must.

A Ponzi scheme does not demand anything of the investor beyond the initial payment. Investors are attracted by the high returns offered, not by peer persuasion. The Ponzi scheme collapses because those returns are generated by stealing the capital, and that theft eventually gets found out, either by audit or by the money running out.

[Mr brolin]

It would not surprise me one iota if a chunk of his loans are interest only payment plans with the principal to be paid on maturity.

He only pays the interest, waits until he's almost at the payment date then refinances it again based on the inflation and Trump inflated value AND does the equivalent of an equity line of credit to draw real valuta out whilst the whole pyramid staggers on until the next principal repayment cycle.

The financial equivalent of a perpetual motion machine as Donny keeps inflating the asset value based on his "feelings" which feeds the lifecycle.

The bottom feeders in finance will keep on feeding this as, to THEM, it's almost risk free. The nominal, imaginary asset valued loan a good margin between the perceived value and the loan value, they make all that lovely lovely money in fees and the like that will be backed loaded into the loan itself.

The next time the loan is maturing the NEW guys ('cause the old ones have all buggered off to the retirement location of choice) will look at the process their predecessors did, dust off the old PowerPoint Decks, rebadge them and do the same AS IT IS THEIR INTEREST TO KEEP THE MAGIC MONEY MACHINE WORKING.

Let me see if I've got this straight -- Trump gets a loan to buy a property (initial terms, down payment, yada yada yada) from someone who puts up actual money to give to the seller. Unlike the loans most of us are familiar with, he only pays interest and fees on this loan -- never paying down the principle. Right before the loan comes due, he finds another lender and, based on a higher valuation, gets a new loan with a different lender who pays off the previous lender (who is now cashed out having made a nice profit on their money over the term of the loan). Trump uses the working income off of the real estate to pay the fees (and support himself) and skims some off of the loan via something like an equity line of credit. As long as you can line up a new lender every time -- who believes in your increased valuation (or doesn't really care) -- then you can keep milking the property in perpetuity and no one really cares about the actual value of the asset -- just that its perceived value lasts long enough for them to cash out.

Is this basically it yes/no?

That is the (relatively) plain vanilla version....... Another variant would be if Donny Boys financial advisors (he is simply too dim to grasp the how) would bundle his various hotel, golf course and sundry assets, into a set of asset backed securities, bundle them into one instrument then split them up into various collateralized debt obligations, offer these Trump branded, solid gold (plated) instruments on a close held sale, have the likes of Moodys give them an AAA rating and slap an "inspection or auditing of these instruments voids warranty" sticker.

Hey it worked for Lehmans and the like