Imagine that while you were a boy, that your father died, and that in his will, he left you a lot within the City of Moline. That lot, at the time, was valued at $10,000 in his estate inventory.
Fifteen years later, you have now graduated from law school, passed the bar, obtained your first job and married. You and you wife now wish to buy a home.
You go to the bank and ask for a $100,000 mortgage. They ask for your financial statement. You state that your income is $90,000 per year, that you have about $50,000 in savings, and that the lot your dad willed you, has a value of $25,000. In setting the value of the lot, you take into account the years of inflation since your dad died.
The bank loans you the $100,000. Under your note and mortgage, you are required to pay the loan off in 20 years. The bank sets the interest rate at 7%.
For the next 20, you faithfully make every payment of principal and interest on time and in full. (You also paid all real estate taxes as they came due). After you have made your last payment, the bank gives you a release of mortgage. You now believe that you own your house free.
But three years later, the Attorney General of your state enters the picture. He sues you for “defrauding” the bank by overstating the value of the lot your father willed to you, and your income. He claims that in your financial statement to the bank, you overvalued your lot by $10,000, and your income by $5000.
The Attorney General claims that had you honestly stated the value of your lot to be $15K rather than $25K, and your income to be $85K rather than $90K, the bank probably would have asked for interest at the rate of 8% rather than 7%. The Attorney General brings in a CPA to support his allegations. He asked that you be assessed a civil penalty equal to the extra 1% interest that the bank would have earned over the 20 year-period, or approximately $10,000.
The judge rules that for the Attorney General to prevail, it is not necessary that the bank deemed itself damaged by your ”fraud,” or that it even relied upon your “fraud.” The judge assesses a $10,000 civil penalty upon you. Moreover, he assesses interest, compounded yearly, on each of the twenty $1000 payments of interest that you should have made over each of the twenty years of your mortgage.
Remember: The bank has never made any complaint of “fraud.” They deemed that they had been repaid in full. `Indeed, they may never see a penny of the judge’s $10,000-plus award. That may all go into the coffers of the State.
Would you feel you had been treated fairly by the judge? By the Attorney General?
You would probably insist that you have been judicially screwed. That’s precisely what former-President Trump is doing — and for the same reason.
Mr. Trump has previously written The Art of the Deal. Now you and he can combine to write The Art of the Judicial Screwing.
First Published in the Moline Dispatch and Rock Island Argus on February 29, 2024.
Copyright 2024, John Donald O'Shea
Copyright 2024, John Donald O'Shea
