“That is a fantasy world, not the real world.”

So wrote Arthur Engoron, a New York State judge, in an unexpected ruling late yesterday that threatens the heart of Donald Trump’s business empire. Engoron was referring in particular to arguments offered by the former president’s attorneys in the case, but his words describe many of the details of the case—such as the valuations of Trump’s properties and even the square footage he claimed they contained, both of which the court found were “clearly” fraudulent. Much of the reputation Trump cultivated as a business mogul was built on lies.

The surprise is not that Trump and his co-defendants, including his sons Donald Jr. and Eric, committed fraud. What is surprising is that he could finally be punished for it—and quite harshly. The scheme that New York Attorney General Letitia James alleged last year was simple. When Trump wanted to lower his taxes, he’d claim a low valuation for a property. When he wanted to get cheap loans, he would inflate the valuation. This allowed him to inflate his claimed net worth each year, which let him obtain loans on better terms by personally guaranteeing them. Evidence of this pattern had already turned up in reporting, especially by WNYC and ProPublica, and James’s case offered much more.

[David A. Graham: It’s just fraud all the way down]

Trump’s lawyers argued, in effect, that because there was no harm, there was no foul: The banks that loaned Trump money ended up making a profit (in part because they could charge higher fees to a customer whose companies had repeatedly gone bankrupt). To Engoron’s fury, Trump’s lawyers kept offering the same defenses even after they’d been thrown out in court. “Defendants’ conduct in reiterating these frivolous arguments is egregious,” he wrote, and fined the attorneys.

More consequentially, he also granted the attorney general’s request to cancel business certificates for Trump and his family. If the ruling stands, Trump could lose control of some of his marquee properties—including Trump Tower and 40 Wall Street, a prized downtown-Manhattan building. “The decision seeks to nationalize one of the most successful corporate empires in the United States and seize control of private property,” Trump’s attorney Christopher M. Kise complained. The ruling doesn’t actually amount to expropriation, as Trump would still own the buildings; he just couldn’t make financial decisions about them. The ruling also wouldn’t spell the end of Trump’s business, but it could force it to stop operating in New York State. (Trump’s properties sprawl across a range of different entities.)

Engoron’s ruling does not close the case out. Instead, it resolves some of the issues and narrows the questions for an upcoming trial, which will determine whether Trump has to pay a fine for overvaluing the properties. James has sought $250 million. This is a very large sum, though easily within Trump’s means if he is the billionaire he says he is.

[David A. Graham: This is not great news for Donald Trump]

The greatest blow to Trump may be reputational and psychological. He has claimed that the case against him is political persecution, and some of his supporters will find that compelling, but being found to be a fraud is no more an advantage than being indicted is. Because Trump has gotten away with this way of operating for decades, his fantasy world came to seem almost real. The idea that a judge might actually punish him seemed remote—both to Trump and to his detractors.

Though the civil case in New York has no direct connection to Trump’s other legal troubles, Engoron’s ruling suggests that the courts are now catching up to a man who has long behaved as though there would never be any consequences for his deceptions. Trump has tried to convince Americans that he won more votes than Joe Biden, that the 2020 election was stolen from him, that he had every right to abscond with classified documents and obstruct the federal government from recovering them, and that he was the greatest president in American history. This is a fantasy world, but the real world has ways of intruding on it.

The contemporary ethical standards that many Americans want to see the Supreme Court adhere to are exactly that—contemporary. Throughout the Court’s long history, justices have had conflicts of interest that we would find unacceptable today. And in the past, people didn’t seem to mind quite so much.

In 1803, Chief Justice John Marshall, who wrote the Court’s landmark opinion in Marbury v. Madison, should have recused himself by contemporary standards. The case concerned the validity of judicial commissions that he had himself signed and sealed, and that his brother James Marshall had been charged with delivering. But Chief Justice Marshall didn’t recuse himself—and nobody objected at the time. In 1972, Chief Justice Warren Burger spoke by telephone with President Richard Nixon about cases and issues that were or could come before the Court, including school busing and obscenity. The news became public in 1981, while Burger was still chief justice—and was met with a relative shrug.

Nor are potential financial conflicts anything new. The justices have long benefited from the generosity of rich friends, which until recently generated little concern. Justice William J. Brennan’s acceptance of $140,000 in gifts and forgiven debts from a wealthy businessperson in the 1990s, far from making front-page news, showed up in a tiny article on the bottom of page A9 of The New York Times. In 1995, reports that seven different justices enjoyed luxurious trips over a 13-year period, courtesy of a major legal publisher (and Supreme Court litigant), generated little interest from Congress. More recent instances when millionaires and billionaires bankrolled trips taken by Justices Antonin Scalia, Ruth Bader Ginsburg, and Stephen Breyer spurred generally mild media coverage with hardly any outrage. (Although Justice Abe Fortas’s financial entanglements with the financier Louis Wolfson ultimately caused Fortas to resign, the allegations against the justice—who had agreed to accept large cash payments from Wolfson for the rest of Justice and Mrs. Fortas’ lives in exchange for the justice providing unspecified “services” to this subsequently convicted felon—were far more serious than any made recently.)

[Bob Bauer: The Supreme Court needs an ethics code]

The current climate is very different. Last year, critics lambasted Justice Clarence Thomas for not recusing in cases involving the January 6 attack on the Capitol after text messages from his wife, Virginia, revealed her involvement in the effort to overturn the 2020 presidential election. Then, in April, ProPublica reported on the relationship between Justice Thomas and the real-estate tycoon Harlan Crow, which was followed by more reports of other financial entanglements between justices and wealthy benefactors. These reports stoked public anger; politicians of both parties, newspaper editorial boards, and numerous commentators called for a formal code of ethics at the Supreme Court, possibly including limits on the gifts the justices can accept and more robust disclosure requirements.

So the question is not why today’s Court has so many potential conflicts and controversies, some of them problematic (the Ginni Thomas texts), some of them less so (Venmogate). The question is why they have generated so much attention and outrage compared with decades past.

Part of this is undoubtedly partisan opportunism, with critics on the Court’s left and right seeking additional reason to delegitimize the decisions of their disfavored justices, amplified through a hyper-politicized media environment. But a more fundamental, albeit interrelated, reason is at play: the rise in recent years of a strong anti-elitism in American politics, what David Brooks has dubbed a “distrustful populism.”

One principal feature of this form of populism is a rejection of an earlier narrative that the powerful attained their posts because of “merit.” Instead, on both the left and right, an increasing suspicion has emerged that meritocracy is toxic, a system that rewards power and privilege with yet more power and privilege.

Attitudes toward Supreme Court justices reflect this shift. Back when Justices Clarence Thomas and Sonia Sotomayor were nominated, their paths—from childhood poverty to Ivy League law schools to the highest court in the land—were celebrated as American success stories. But these days, when commentators note that eight of the nine justices graduated from Harvard or Yale Law School, it’s almost always the subject of complaint rather than acclaim.

This anti-elitist turn extends even to the hiring of the justices’ law clerks. Earlier this year, when a study found that going to an elite college greatly enhanced one’s chances of landing a Supreme Court clerkship, an author of the study complained that it reflected “some of the worst pathologies in American society.” When it became public in July 2021 that Justice Elena Kagan offered a clerkship to Jessica Garland, the daughter of former D.C. Circuit Chief Judge and current Attorney General Merrick Garland, the news was condemned as a glaring example of “nepotism” and “another justice not caring about conflicts of interest.” (Jessica Garland’s clerkship has been postponed to a time when her father is no longer attorney general.)

Which is not to say that all distrust and calling out of elites is a bad thing; much of it represents a belated and worthy recognition of deep unfairness in many parts of American society. But recognizing the relative recency of such concerns should also affect the approach to ethics reforms for the Court.

[Glenn Fine: The Supreme Court needs real oversight]

First, although greater scrutiny of the justices is salutary, blaming them for conduct based on standards developed after the actions at issue may be counterproductive. Hyperbolic condemnation of the justices, including calls for impeachment, has the potential to backfire. It makes the justices more defensive—as reflected in a recent Wall Street Journal interview of Justice Samuel Alito, in which he asserted that “no provision in the Constitution gives [Congress] the authority to regulate the Supreme Court”—and less likely to voluntarily adopt an ethics code. And given questions surrounding Congress’s ability to impose ethics requirements on the Court, both constitutionally (because of separation of powers) and politically (because of Republican opposition), getting the justices to adopt a code on their own is still the most likely path to reform.

Second, as history has made clear, as long as the justices are real people underneath their robes, they will have potential conflicts of interest. The justices are human (and Americans want them that way—research shows that Americans trust human judges more than artificial-intelligence judges). The justices will have friends—who might be inclined to entertain or help them, as friends do. The justices will have spouses—who might have lucrative careers and outside clients. The justices will have human desires—perhaps for the finer things of life, perhaps for fame.

Given this, strengthening disclosure requirements—and imposing real consequences for violations, such as serious financial penalties—may be more productive than trying to police the friendships of the justices or the gifts they can receive. An ethics regime that gives the justices broad leeway in their and their spouse’s outside relationships, tied to greater disclosure of those relationships, could be a reasonable compromise acceptable to both Congress and the Court.

Despite its issues past and present, the federal judiciary is one of the world’s best in terms of independence and integrity. We know this firsthand, having clerked for three federal judges between the two of us and having appeared as lawyers before many more. We have also followed and written about the Supreme Court for years, for both scholarly and general-interest publications (separately and together, as a married couple).

Yes, the Supreme Court should adopt an ethics code, at the very least to convey to the public that it is, in Kagan’s words, “adhering to the highest standards of conduct.” But Americans should also proceed with caution and humility when advocating for what such a code should contain, tempering today’s populist sympathies with an understanding of history and a recognition that if the public wants justices to be humans, not Platonic Guardians or AI creations, they must accept the burdens as well as the benefits of that bargain.