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www.theatlantic.com › newsletters › archive › 2023 › 09 › new-york-ruling-trump-organization › 675475

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Donald Trump is a deals guy. He rode his image as real-estate mogul and a maestro of transactions first to pop-culture stardom, then to the White House. Now a judge has ruled that much of that dealmaking was fraudulent: New York Judge Arthur Engoron found yesterday that Trump and his associates, including his sons Eric and Donald Jr., committed persistent fraud by toggling estimates of property values in order to get insurance and favorable terms on loans. The judge ordered that some of the Trump Organization’s “certificates,” or corporate charters, be canceled, and that a receiver be appointed by the court to dissolve some of its New York companies. This latest blow for Trump puts on record that his mythos of business acumen was largely built on lies.

This ruling on its own hinders some of the Trump Organization’s operations in New York State by cutting off Trump’s control of assets. But really, it is just a first step toward the broader business restrictions on Trump that New York Attorney General Letitia James is seeking, Celia Bigoness, a clinical professor of law at Cornell, told me. And to the extent that this ruling shows how the judge feels about James’s suit, first brought against Trump last year, things are not looking great for him. In the trial set to start next week, the judge will determine penalties for the fraud committed: James has requested that those include a $250 million fine and restrictions that prevent the former president and some of his children from running a company in New York ever again. “Trump is synonymous with New York,” Bigoness said. Losing control of his New York businesses and properties would amount to “his home and the place that he has tied himself to shutting him out entirely.” It could also be hugely costly.

This week’s summary judgment is unusual, legal experts told me: The judge essentially determined that it was so clear that Trump had committed fraud that it wasn’t worth wasting time at a trial figuring that part out. Instead, the trial will be used to determine whether Trump’s New York businesses should be further limited as punishment for the fraud—and whether the other demands of James’s suit will be met. It’s somewhat rare for a summary judgment to get to the core of a case like this, and the judge’s decision was distinctly zingy and personal. Responding to Trump’s team’s claims that the suit wasn’t valid, Judge Engoron said that he had already rejected their arguments, and that he was reminded of the “time-loop in the film ‘Groundhog Day.’” In a footnote to his ruling, he quoted a Chico Marx line from Duck Soup: “Well, who ya gonna believe, me or your own eyes?”

In another unusual move, the judge also included individual fines against Trump’s lawyers as part of the ruling, charging each $7,500 for bringing arguments so “frivolous” that they wasted the court’s time. Separately, Trump’s lawyers are trying to sue the judge (a long-shot attempt). Trump, for his part, posted on Truth Social that he had “done business perfectly”; he also called the judge “deranged.” Reached for comment, the Trump attorney Christopher Kise called the decision “outrageous” and “completely disconnected from the facts and governing law.” “President Trump and his family will seek all available appellate remedies to rectify this miscarriage of justice,” he said in an emailed statement. An appeals process from Trump’s camp could extend into the next presidential-election cycle. His team might also attempt to get an emergency stay to prevent the trial from starting next week.

This ruling, and the rest of James’s suit, are circumscribed to New York. Technically, Trump would still be free to spin up new businesses as he sees fit in another state, and he has holdings beyond New York. But even if he could legally incorporate a new business in, say, Florida or Illinois, it might not make financial or brand sense for him. The fallout from this case could wind up being very costly for Trump, so setting up shop elsewhere, although not impossible, could be a major financial hurdle. Plus, “New York is the place Trump wants to do business and has been doing business for forever,” Caroline Polisi, a white-collar defense attorney and lecturer at Columbia Law School, told me.

Yesterday’s ruling may do little to dampen Trump’s appeal among his die-hard fans, who have stuck with him through all manner of scandals, including a running list of criminal indictments. But it could puncture Trump’s persona. My colleague David A. Graham wrote today that the fact that Trump and his co-defendants, including his sons, committed fraud is not surprising. What is surprising, he argued, is that they are facing harsh consequences. “Trump’s political career is based on the myth that he was a great businessman,” David told me. “This ruling cuts straight to the root of that, showing that his business success was built on years of lies.” Indeed, when Letitia James filed suit against Trump last year, she dubbed his behavior the “art of the steal.”

Today’s News

The U.S. soldier Pvt. Travis King, who sprinted across the border into North Korea two months ago, has been released into American custody. The second Republican presidential primary debate will be held in California tonight. A federal judge struck down a Texas law that drag performers worried would ban shows in the state.

Dispatches

Up for Debate: Driverless cars are a tough sell. Conor Friedersdorf compiles reader perspectives on the future of the technology.

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Evening Read

Illustration by The Atlantic. Source: Getty.

Revealed: The Authors Whose Pirated Books Are Powering Generative AI

By Alex Reisner

One of the most troubling issues around generative AI is simple: It’s being made in secret. To produce humanlike answers to questions, systems such as ChatGPT process huge quantities of written material. But few people outside of companies such as Meta and OpenAI know the full extent of the texts these programs have been trained on.

Some training text comes from Wikipedia and other online writing, but high-quality generative AI requires higher-quality input than is usually found on the internet—that is, it requires the kind found in books. In a lawsuit filed in California last month, the writers Sarah Silverman, Richard Kadrey, and Christopher Golden allege that Meta violated copyright laws by using their books to train LLaMA, a large language model similar to OpenAI’s GPT-4—an algorithm that can generate text by mimicking the word patterns it finds in sample texts. But neither the lawsuit itself nor the commentary surrounding it has offered a look under the hood: We have not previously known for certain whether LLaMA was trained on Silverman’s, Kadrey’s, or Golden’s books, or any others, for that matter.

In fact, it was. I recently obtained and analyzed a dataset used by Meta to train LLaMA. Its contents more than justify a fundamental aspect of the authors’ allegations: Pirated books are being used as inputs for computer programs that are changing how we read, learn, and communicate. The future promised by AI is written with stolen words.

Read the full article.