ALEX BRUMMER: Trump fraud trial does more harm than good to financial justice

The financial world has its eyes firmly focused this week on the trial of alleged crypto fraudster Sam Bankman-Fried and his FTX exchange.

The case has attracted extra attention because of the understanding approach to the Bankman-Fried story taken by writer Michael Lewis.

He is a specialist in unravelling the character of the oddballs operating on the fringes of 21st century finance.

As fascinating is the civil fraud trial in another Manhattan court room. 

Donald Trump is accused by New York state attorney general Letitia James of ‘grossly’ inflating his assets so as to impress Forbes magazine and win better terms from bankers.

Charges: Donald Trump is accused by New York state attorney general Letitia James of grossly inflating his assets so as to impress Forbes magazine and win better terms from bankers

The aim is to dispossess Trump of his properties and exclude him and his family from doing business in New York.

Few dispute that Trump is a malevolent influence on American politics and the law should be applied when it comes to his efforts to derail the democratic process. 

Yet there is something curious about the Manhattan civil trial. No one who has monitored Trump could have doubts about his self-aggrandisement.

A tendency to exaggerate the scale of his assets will come as no surprise. More puzzling is that personal valuations were accepted by Deutsche Bank, which made loans to the former president’s companies. 

Although the basis on which these valuations were accepted has not been disclosed.

Firstly, property values do go up and down like a yo-yo, which is why, at a time of rising interest rates, there are bargains to be had.

Secondly, whereas Forbes may not need to audit wealth when compiling its billionaires list, it would be unthinkable for banks, auditors and lawyers to take home-made valuations on trust. Independent valuers verify what the borrower or seller has to say.

If Trump was providing dodgy data, it is their job to discover it. As anyone buying or selling a house knows, valuations are in the eye of the beholder and vary greatly. 

Some of this is a reminder of retailer Philip Green’s tussles in the Commons over the sale of BHS to Dominic Chappell – later convicted as a tax offender – which was signed off by the City establishment.

Doubtless bullies such as Trump are able to exert undue influence over professional advisers. But as Judge Engoron asserted, ‘puffery’ of values and measurements in the Trump case doesn’t seem ‘to have created losses for creditors’.

There may well be surreptitious payments to advisers which allowed distorted values to be attached to transactions. 

But this ill-targeted Trump fraud trial does more harm than good to financial justice. Focus should be on real charges of white collar crime such as those against Bankman-Fried.

Fashion victim

Most concerns about online fast fashion outfit Boohoo have been about executive greed, inter-company transactions and rotten factory conditions.

Founders Mahmud Kamani and Carol Kane were able to navigate the stormy waters because investors fell for the durability of its online model in the pandemic.

Boohoo even had enough confidence to snap up totemic brands Karen Millen and Debenhams when the High Street went horribly wrong. 

Now there are questions about the durability of its model. The group is still making underlying profits.

Margins, though squeezed, look robust enough. Sales are a different issue. Despite inflation, revenue is set to fall between 12 per cent and 17 per cent in the year to February against a past projection of 5 per cent. After another tumble the shares are more than 90 per cent off their 2020 peak.

Contrast Boohoo with Primark, owned by ABF, where stores are mobbed and sales were up 15pc in the year to September. The comeback of bricks-and-mortar fashion is also to be seen at M&S where Jaeger has re-emerged as an affordable luxury brand.

Frasers stands in the wings as a strategic shareholder with a 10pc stake. Could Mike Ashley want more than a nibble?

Drug wars

American patients and class action lawyers are smart at shaking down big pharma.

AstraZeneca is shelling out £350million to settle claims it failed to alert consumers of the risk of chronic kidney disease from its reflux medicine. 

Nexium is on the shelf still at Boots and for consumers of its prescription equivalent Omeprazole (such as this writer), such outcomes are never a confidence builder. 

When it comes to health, financial settlements should never be regarded as just another cost of doing business.

This post first appeared on Dailymail.co.uk