New York Consolidated Laws, Penal Law - PEN § 175.45 Issuing a false financial statement
Current as of January 01, 2021 | Updated by
FindLaw Staff
A person is guilty of issuing a false financial statement when, with intent to defraud:
1. He knowingly makes or utters a written instrument which purports to describe the financial condition or ability to pay of some person and which is inaccurate in some material respect; or
2. He represents in writing that a written instrument purporting to describe a person's financial condition or ability to pay as of a prior date is accurate with respect to such person's current financial condition or ability to pay, whereas he knows it is materially inaccurate in that respect.
Civil penalties levied against trump were based on a disgorgement of the profits generated from receiving loans at a much more advantageous rate (in case the reliance on trump's personal guarantee established a rate of 4-5% v. 10% due to the existence of the guarantee and related fraudulent financial statements). Thus the "fine" was simply a disgorgement of profits generated due to the fraud.
From the New York decision:
DISGORGEMENT OF ILL-GOTTEN GAINS [W]here, as here, there is a claim based on fraudulent activity, disgorgement may be available as an equitable remedy, notwithstanding the absence of loss to individuals or independent claims for restitution.
Disgorgement is distinct from the remedy of restitution because it focuses on the gain to the wrongdoer as opposed to the loss to the victim. Thus, disgorgement aims to deter wrongdoing by preventing the wrongdoer from retaining ill-gotten gains from fraudulent conduct. Accordingly, the remedy of disgorgement does not require a showing or allegation of direct losses to consumers or the public; the source of the ill-gotten gains is “immaterial.”
