The Trump siblings, plus Eric and Tiffany. (photo: Win McNamee/Getty Images)
DA Who Dropped Fraud Case Against Trump Kids Did Opposite With Immigrant
Family
By Matt Taibbi, Rolling Stone
07 October 17
Manhattan DA Cy Vance, in the news this week, was the prosecutor who pushed
the ill-fated Abacus prosecution
A big story hit the news this week after a joint investigation by
ProPublica, WNYC and The New Yorker. Reporters Andrea Bernstein, Jesse
Eisenger, Justin Elliott and Ilya Marritz discovered that Manhattan District
Attorney Cy Vance dropped a potential felony fraud case against Ivanka and
Donald Trump Jr., before a campaign contribution made to Vance.
It was a real estate fraud case involving Trump SoHo, a hotel and condo
project. Investigators believed the Trumps had made falsely reassuring
statements to prospective buyers of units in the complex, where sales had
been tepid.
The reporters learned that the evidence included email chains in which the
Trumps "discussed how to coördinate false information." In another set of
communications, they apparently reassured a broker who was concerned about
the deception.
When the investigation got hot in May of 2012, Trump personal lawyer Marc
Kasowitz went to meet with Vance. Three months later, the case went away.
Kasowitz reportedly later bragged about his work, saying it was "amazing I
got them off." (The lawyer now denies making that statement). Subsequently,
Kasowitz made an additional contribution to Vance of $32,000, and reportedly
helped route additional contributions to the DA.
At almost exactly the same time he was meeting with Trump's lawyer, Cy Vance
was pushing another case through the Manhattan courts. On May 31st, 2012,
just two weeks after his meeting with Kasowitz, Vance's office moved to
indict for mortgage fraud a tiny Chinese immigrant bank called Abacus
Federal Savings, along with 19 of its employees.
For the arraignment in the case, the 19 individual defendants were
frog-marched into court in a literal chain gang you can see the now
infamous photo in a contemporary New York Times piece in a scene that was
clearly designed to show Vance's office was throwing the book at
white-collar offenders. Some of the people in the chain gang made as little
as $35,000 a year.
Though the case had absolutely nothing to do with the 2008 financial crisis
more on that in a moment Vance shamelessly pitched Abacus as a
prosecution directed at the causes of the crash.
"If we've learned anything from the recent mortgage crisis," he said, "it's
that at some point, these schemes will unravel and taxpayers could be left
holding the bag."
Abacus was a small family-owned bank, a mainstay of the Chinatown
neighborhood, that had self-reported the discrepancy that led to the
prosecution. In exact contrast to the broader financial crisis dynamic, it
made home loans to people who made their payments. The alleged victim,
Fannie Mae, did not experience a penny of loss. Abacus was ultimately found
not guilty, in a major embarrassment to Vance's office.
The absurdity of the Abacus case was that Vance could have walked in just
about any direction in lower Manhattan and run into a viable mortgage fraud
prosecution involving a much bigger actor. Virtually all of the country's
biggest banks have since settled, in many cases for billions, for behavior
far worse than anything Abacus was even alleged to have done.
But Vance picked Abacus for prosecution, seemingly because it was small and
easily pushed around, rather than take on the behemoths in lower Manhattan.
The case was a metaphor for the criminal justice system as a whole, which
consistently avoided treating fraudsters at big banks as criminals. The more
typical resolution involved back-room settlements in which money changed
hands but no executives did time or got a record.
The news about the Trumps highlights this dynamic. Underscoring that I don't
know how solid the prosecution's case was against Don Jr. and Ivanka, this
new story fits the pattern: The rich and connected get off, while those
outside the tent are prosecutable. We've effectively divided the country
into two classes, Too Big to Fail and Small Enough to Jail.
I ended up writing about the Abacus case in my book, The Divide. Hoop Dreams
director Steve James and producer Mark Mitten ultimately also made a movie
about the case. The film, Abacus: Small Enough To Jail, has achieved
critical acclaim this year and apparently is an Oscar contender.
There is an irony in the side-by-side cases of Abacus and the Trumps.
Abacus, founded by Thomas Sung and run by daughters Vera and Jill Sung, was
also a New York family business with strong real estate interests. The Sungs
were not politically connected in the same way the Trumps were.
This was simply a case of one successful New York family being inside the
tent, and the other family being outside looking in.
When I first heard Vance had kicked the Trump case while he was targeting
the Sungs, I had mixed feelings.
On the one hand, the Trump SoHo case sounds like exactly the sort of fraud
prosecution that at some point long before last year's presidential run
should have taken place in the orbit of Donald Trump, a man who has
demonstrated over and over that he has no compunction about lying in the
most high-leverage situations.
The infamous Trump University mess, which then candidate Donald "I don't
settle lawsuits" Trump settled for $25 million, is an example of something
that feels like it should have stuck to the Trump empire long before we got
to this place.
In that highly similar situation, incidentally, Trump reportedly made an
illegal campaign contribution to Florida Attorney General Pam Bondi, after
Bondi had begun investigating Trump University.
My other reaction, though and I know how this is going to sound was that
even the Trumps were relatively small-time compared to the targets Vance
could have chosen.
The financial crisis of 2008 was caused by fraud on a massive, industrial
scale, far beyond anything Don Jr. and Ivanka could have pulled off. The
misrepresentations made by megabanks were systematic and involved hundreds
of billions of dollars worth of financial instruments. When the toxic deals
went south, they nearly sank the world economy.
Even if Vance had gone forward with a prosecution of the famous Trumps, in
other words, it would have been a paltry effort compared to what he could
have done, in terms of targeting the systemic problem. But he lacked the
backbone even to take on connected individuals.
Still, the aborted prosecution(s) involving the Trumps should help Americans
understand the high stakes of the Too Big to Fail era. Donald Trump has
successfully danced around the law his whole life, and the consequence we
share for indulging that system of kid-glove treatment for the rich and
connected is that a sociopathic truthophobe and his goofball family now
occupy the White House.
We don't yet know what the consequences will be for the bigger miss: letting
Wall Street skate with a back-room payoff after causing the 2008 crash.
Unfortunately, we'll likely find out sooner or later.
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