In 1944, then-President Franklin Roosevelt went to war with Sewell Avery, the head of retailer Montgomery Ward and a top New Deal critic. Eighty years later, it seems the weaponization of the US government is on full display again. This time, the power of the Leviathan is being used against other thorns in the side of the government like former President Donald Trump and billionaire Elon Musk.
Trump – Enemy of the Deep State?
New York Attorney General Letitia James is seeking $370 million, plus annual interest, in a civil fraud trial involving the Republican front-runner. The lawsuit contends that Trump and his organization inflated several asset values to receive favorable loan terms and insurance rates. While Trump was determined to be liable for fraud this past fall, the court will now determine the monetary penalties.
Letitia James (Photo by Jason Mendez/Getty Images for (BAM) Brooklyn Academy of Music )
Industry experts argue that the lawsuit violates typical real estate development practices. Borrowers will always maximize asset values and place a favorable spotlight on them to receive generous loan terms and insurance rates. What’s more, all of the parties benefited from the former president’s deals with the banks: Lenders were repaid, buildings were constructed, and Trump’s businesses made money.
“Every single real estate developer everywhere on earth does this. They always talk about their asset being worth a lot, and the bank says ‘no,’ and that’s just the way it is,” celebrity investor Kevin O’Leary told CNN last month. “If you’re going to sue this case and win, you got to sue every real estate developer everywhere.”
A key component of the case is that Trump and his family could be prohibited from participating in the New York real estate sector. If Trump receives this punishment, why would anyone want to do business in the Empire State again, especially if they possess the “wrong” politics?
This type of situation is not only confined to New York. A recent case in Delaware involving the wealthiest person in the world may be another indication of what happens when the courts metastasize into political outreach.
Elon Musk Goes to Delaware
In 2018, Tesla Motors CEO Elon Musk was granted a $56 billion pay package, the largest compensation plan in public corporate history. Shareholders overwhelmingly approved the proposal if the company reached several critical milestones over ten years, including hitting a market capitalization of $100 billion. Additionally, the agreement was meant to deter Musk from abandoning the firm and applying his expertise to other companies. Again, the board of directors and investors agreed to this deal.
Six years later, a Delaware judge voided the arrangement. Chancery Court Chancellor Kathaleen McCormick determined that Tesla’s board of directors did not prove “that the compensation plan was fair” or if there was any negotiation with Musk. The decision was made as part of a legal case launched by Richard Tornetta, an investor with just nine shares who requested the funds be rescinded.
To no one’s surprise, Musk took to X to air his grievances, writing: “Change your state of incorporation out of Delaware before they lock the doors.” He also polled his followers if he should change Tesla’s “state of incorporation to Texas, home of its physical headquarters.” Eighty-seven percent voted “yes.” Musk responded: “The public vote is unequivocally in favor of Texas! Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas.”
In the end, was the compensation justified? Here are two key metrics to determine Tesla’s performance: The stock is up 830% since 2018 to nearly $19, and the market cap is about $600 billion. Market analysts believe it is only a matter of time before Tesla returns to the trillion-dollar market cap club.
So, why would this legal ruling happen anyway? Like Trump, Musk was also widely loved. That is until he started speaking out against Democrats, touting free speech on one of the biggest social media platforms in the world, exposing the corridors of power through The Twitter Files, and, perhaps the most unforgivable sin in the world imaginable, reactivating Trump’s X account.
Comparable to New York, why would any corporation want to do business in the Blue Hen State?
Conquest?
“To the individualist, the state is the enemy,” wrote Ernest Benn, an early-20th-century writer and politician. To the state, the individualist is the enemy. The common man is easy to conquer as he does not possess the astronomical resources the Leviathan maintains. But it is more challenging when that person enjoys affluence and fame and can defend himself or herself from the Swamp’s conquest. Are Trump and Musk leading a crusade against the state? Probably not – but they are, at least, thorns in its side.
