A Primer on the Attorney General’s Power to Enjoin Persistent Fraud
Judge Arthur Engoron’s September 26, 2023, decision in the Letitia James v. Donald J. Trump case is certainly worth a read, and not just for its references to the classic comedies “Groundhog Day” and “Duck Soup.” It provides a useful primer on the powers of the Office of the Attorney General of New York State (OAG) to enjoin persistent fraud or illegality under New York Executive Law 63(12) – including, as was ordered here, by ordering disgorgement and dissolving LLCs used for that purpose.
The decision arises out of a years-long investigation that the OAG conducted into certain of defendants’ business practices from 2011 through 2021. And it is a reminder that the OAG is not toothless, and an OAG investigation is nothing to sweep aside. We will be hearing more about this soon – trial opened October 2, 2023, and here is a link to the OAG’s opening presentation.
This decision is not just of interest to those involved in OAG investigations, though.
It is worth a read for all litigators as a compelling reminder of the danger of caving to client instructions to advance arguments without a basis in law or fact – to put in everything including the kitchen sink! Here, the Court attached a $7,500 price tag for each of the five attorneys it found had advanced frivolous arguments. The Court reminds us that, “Counsel should be the first line of defense against frivolous litigation.”
Smith Buss & Jacobs has extensive experience with the OAG, including requesting, supporting, and defending investigations under the Martin Act and Executive Law 63. If you have questions about an OAG investigation or subpoena, please feel free to give us a call.