Could He Face PRISON As Bank Documents EXPOSE “Massive Fraud”? | Jack Smith 

This morning at 9:34 a.m., federal prosecutors filed court documents that could fundamentally change the trajectory of this case. And before you think this is speculation about what might happen someday, I need you to understand what we are actually looking at here. I am not making predictions. I am analyzing real bank documents that have been filed in federal court.

Documents that show a pattern of financial misrepresentation that if proven could result in decades of federal prison time. I have prosecuted bank fraud cases for 30 years. I have reviewed thousands of financial documents. I have seen cases built on circumstantial evidence and cases built on smoking guns.

 And I can tell you that what prosecutors filed this morning falls into the smoking gun category. These are not allegations from arrival. These are not claims from a disgruntled employee. These are bank documents, official records from financial institutions, showing what was stated on loan applications versus what the actual financial situation was.

 So, here is what I’m going to do. I am going to walk you through these bank documents page by page. I am going to show you what the law says about bank fraud and what prosecutors need to prove. I am going to explain what these documents could mean for criminal charges. And I am going to analyze whether the evidence in these filings could lead to a prison sentence.

Because here is what this case represents. If these documents show what prosecutors claim they show, we could be looking at one of the largest bank fraud prosecutions in recent history. The question is not whether the documents exist. They do. The question is whether they prove criminal intent beyond a reasonable doubt.

 I will be covering this case as it develops. Evidence, not spin. If you want to understand how bank fraud cases are actually built from financial documents, stay with me. Now, let me show you exactly what these bank documents reveal and why they matter. Let me walk you through the documents because the details are critical.

 The filing is 89 pages long, submitted by federal prosecutors. The documents were obtained through subpoenas to multiple financial institutions, including Deutsche Bank, Ladder Capital, and several smaller lenders. Each bank provided records of loan applications, financial statements submitted by the borrower, and internal bank analyses of those statements.

 Here is what makes these documents so significant. They are not just copies of what was submitted to banks. They include the bank’s own assessments of whether the information was accurate. And in multiple cases, the bank’s internal documents show they identified discrepancies but proceeded with the loans anyway for reasons we will get to.

 Let me start with the Deutsche Bank documents from 2014. The filing includes a loan application for a Miami Golf Course property requesting $125 million. To qualify at favorable interest rates, the borrower needed to demonstrate significant net worth. The financial statement submitted to Deutsche Bank claimed total net worth of $8.7 billion.

 That number is critical because it allowed the borrower to be classified as high net worth, low risk. High net worth clients get better interest rates. In this case, 2.96% instead of 5 to 6% for a riskier borrower. But here is what the documents show. Attached to the filing are internal Deutsche Bank emails from 2015. These emails discuss concerns that the net worth figure might be inflated.

 One email from a risk officer states, quote, “The claimed net worth of $8.7 billion appears inconsistent with independent valuations we have obtained. several properties listed at values significantly higher than market comparables. End quote. The bank conducted its own assessment. According to documents in the filing, Deutsche Bank’s internal analysis valued the borrower’s actual net worth at approximately $3.1 billion.

That is $5.6 billion less than what was claimed. Now, you might be asking, if the bank knew there was a discrepancy, why did they approve the loan? The documents answer that question. Another email in the filing shows a senior bank executive writing, quote, “This relationship generates significant revenue for the bank.

 We should proceed with enhanced monitoring rather than declining the loan.” End quote. So, the bank knew the net worth was inflated. The bank proceeded anyway because of profitability. But the fact that the bank approved the loan does not make the false statement legal. You still committed bank fraud. The question is whether prosecutors can prove you knew the statement was false when you made it.

 Let me show you what the documents reveal about that question. The filing includes financial statements from multiple years. 2014, 2015, 2016, 2017, 2018. Each year, a financial statement was submitted as required by the loan agreements, and each year the same pattern appears. Properties are valued far above what independent appraisersdetermined they were worth.

 Here are specific examples from the documents. Trump Tower Triplex Apartment. The financial statements from 2015 through 2018 valued this property at 327 million. The valuation was based on claiming the apartment was 30,000 square ft, but documents in the filing include the actual condominium floor plans. The apartment is 10,96 square ft. That is not a rounding error.

That is claiming your apartment is three times larger than it actually is. When you triple the square footage, you can triple the valuation. The documents showed that using accurate square footage, the apartment should have been valued at approximately 80 million. That is a $247 million overstatement on a single property, Seven Springs Estate in New York.

 The financial statements valued this property at $291 million, claiming it was a potential development site. But documents in the filing include a conservation easement that was placed on the property. That easement legally prevents development. You cannot claim a property is worth $291 million as a development site when you have legally agreed never to develop it.

 The documents show the property should have been valued at approximately $56 million based on its actual use restrictions. That is a $235 million overstatement. 40 Wall Street office building in Manhattan. The financial statements valued this building at $527 million using a capitalization rate that assumed it was a modern class A office tower, but the building is 95 years old.

Documents in the filing include the actual lease rates and occupancy data. When you use appropriate capitalization rates for an aging building, the value is approximately $26 million. That is a $321 million overstatement. When you add up just these three properties, the total overstatement is over $800 million.

 These inflated values were used to calculate total net worth. That inflated net worth was used to qualify for loans at lower interest rates. Now, let me show you what the law says about this. Federal bank fraud is defined under 18USC section 1344. To prove bank fraud, prosecutors must establish four elements. Element one, the defendant made a false statement to a financial institution.

 The documents filed today provide financial statements with property valuations that the bank’s own analyses show were false. That element could be proven if the valuations are indeed inaccurate, as the documents suggest. Element two, the defendant knew the statement was false when it was made. This is the hardest element to prove, but the documents include evidence that could establish knowledge.

For the triplex apartment, the documents show the borrower has owned and lived in that apartment for decades. It is not plausible to claim you do not know the size of your own residence. For the Seven Springs property, the documents show the borrower personally signed the conservation easement.

 You cannot claim you did not know about a development restriction you personally agreed to. Element three, the defendant intended to influence the bank’s decision. The documents show that the financial statements were submitted as part of loan applications and annual compliance requirements. The statements were clearly intended to influence the bank’s lending decisions.

 Element four, the bank relied on the false statements. This is where the case gets interesting. The documents show the banks identified problems but lent anyway. Does that defeat the reliance element? Not necessarily. If the bank would have charged higher interest rates had they known the true net worth, there is still detrimental reliance.

 The documents show that classification as a high netw worth borrower resulted in interest rates 2 to three percentage points lower over the life of multiple loans. That difference amounts to approximately $168 million in interest savings. That is $168 million that stayed in the borrower’s pocket because of the false statements.

 So, could these elements be proven beyond a reasonable doubt? Based on three decades of prosecuting these cases, I can tell you that if the documents are accurate and if the pattern holds across multiple years and multiple properties, prosecutors have a strong case. But let me address potential defenses.

 Defense one, valuations were prepared by accountants and borrower relied on their expertise, but documents could show the borrower had personal knowledge contradicting the accountants. Defense two, valuations are subjective and reasonable people can disagree. This works for close calls, not when you claim your apartment is 30,000 square ft and floor plans show 11,000.

 Defense three, banks were sophisticated and did their own due diligence. The law does not require the victim to be unsophisticated. Even if banks should have caught problems, lying to them is still fraud. Defense four, banks made money and nobody lost anything. Bank fraud does not require actual loss. It requires intent to defraud.

 The defensesface significant challenges if documents are as prosecutors describe. Now, let me explain what could happen next. These documents were filed as part of a civil case. But bank fraud is also a criminal offense. When civil cases uncover evidence of potential criminal conduct, federal prosecutors open parallel investigations. Within 60 days, prosecutors could present this evidence to a federal grand jury.

 The grand jury would hear testimony from bank employees who authenticate documents and explain loan approval process. They would hear from appraisers who testify about proper valuation methods. If the grand jury finds probable cause, they return an indictment. An indictment could include dozens of counts with each false statement on each loan application as a separate count.

 Each count of bank fraud carries a maximum sentence of 30 years, but actual sentence would be based on federal sentencing guidelines. Those guidelines calculate sentences based on loss amount. When laws exceeds $25 million, guidelines recommend 10 to 12 years. When laws exceeds $100 million, guidelines go up to 20 years or more.

 If prosecutors prove $168 million in interest savings, we are looking at highest end of guidelines. A sentence of 15 to 20 years would not be surprising. Federal prosecutors win over 90% of cases they bring to trial. Most defendants in strong cases negotiate plea agreements rather than risk trial. A plea agreement might result in a lower sentence in exchange for cooperation and acceptance of responsibility, but even a favorable plea deal would likely involve multiple years in federal prison.

 Now, let me address what you are probably thinking. Will this actually result in charges? I cannot predict the future, but I can analyze the strength of the evidence. If these documents are accurate, if the pattern is as clear as the filing suggests, and if prosecutors can prove knowledge and intent, this is a prosecutable case.

 The question is whether prosecutors will bring it. From a purely legal standpoint, the documents filed today could support criminal charges. Whether those charges are filed remains to be seen. The evidence is public. The documents are filed in federal court, and the pattern they reveal demands serious scrutiny. I will be following this case closely.

 If a grand jury is convened, I will cover it. If an indictment is filed, I will analyze it. And if this goes to trial, I will break down the evidence. This case, if it proceeds, will test whether financial fraud has consequences even when banks made money. It will test whether sophisticated victims deserve fraud law protection.

 And it will test whether bank documents alone can prove criminal intent. The documents filed today force us to confront these questions. Let me know in the comments what you think. Based on these bank documents, could criminal charges be filed? I read every comment. Thank you for watching.