Mitchell Driskell

Published on March 30th, 2023 | by Mitchell Driskell


The Local Lawyer: Barstool Briefs Part 32: “Short Stories on Legal Affairs”

The State of New York vs. Trump

Stormy Daniels is the porn star who started making the talk show rounds in 2015. Trump paid her $120,000 for a Non-Disclosure Agreement through attorney Michael Cohen and classified the payment as “attorney’s fees.”

The State of New York is prosecuting Trump for allegedly misclassifying “hush money” as attorney’s fees. The alleged crime, Falsifying Business Records, is a misdemeanor, low level crime, like a speeding ticket, under usual circumstances. However, the crime is a serious felony if done in an attempt to cover up another, separate crime.

Hush money payments to protect your marriage, your business, your reputation, etc. are perfectly legal in New York. In those situations, the misclassification of the payment as attorney’s fees is just a low-level misdemeanor. But that is no fun for prosecutors, and it is a crime to pay someone to stop talking bad about you to help your campaign for elected office, so New York is saying that the payment to Stormy was a felony-level political hush payment which makes misclassifying the payment as attorney’s fees is a higher level, felony crime itself.

To make its case New York will have to prove—beyond a reasonable doubt—why Trump paid Stormy the money. “Why” someone does something is notoriously hard to prove, especially when there are other plausible motivations for the act. Surely Trump did not create any written record of “why” he was making the payment, and it is anticipated that the only evidence New York will have on the “why” issue is the testimony of Michael Cohen, a fired lawyer and convicted felon who openly hates Trump, and Stormy, a jilted lover who also openly hates Trump.

All this hullabaloo is about an act that is arguably a misdemeanor and rises to the felony level on very shaky evidence—being prosecuted by a State Attorney General who ran for office on the promise that she would prosecute Trump for something, anything.

New York is paying millions to investigate and prosecute a 2015 entry in an expense ledger with the prime witnesses being a former porn star who was admittedly extorting Trump and a disbarred lawyer. Love Trump or hate Trump, but no one can deny that this prosecution is (1) politically motivated and (2) much ado about nothing.

Silicon Valley Bank Explained

The Federal Reserve has been raising interest rates for months. Higher interest rates makes it harder for technology startups, Silicon Valley Bank’s primary clients, to obtain money from investors. So these startups recently started taking money out of their SVB accounts to meet their day-to-day needs, reducing SVB’s money in reserves.

Additionally, SVB’s clients learned that SVB had an investment problem. SVB had taken a significant percentage of deposit money and invested that money in long term investments that paid an average 1.7% interest. That was not a problem until interest rates began to rise, and as rates rose the value of those investments declined. A 10-year $100 bond that pays 3.9% interest is more valuable than a 10 year $100 bond that pays 1.7% interest. As interest rates rise, the 10-year $100, 1.7% bond loses value because a person will not buy that bond today for $100 when she can buy a $100 bond that pays a higher-interest on the open market. In order to sell that lower-interest bond, that bond must be sold for a discount, the up-front purchase price must be reduced to cover the lower interest that money will earn.

Therefore, if enough of SVB’s clients came to the bank one day to withdraw money, and SVB had to start selling those bonds to get the money to pay out deposits, the bank would lose money and might not be able to get enough money to pay out all of the deposits. SVB’s long-term bonds lost a ton of value over the last six months, but SVB was not reporting that value on its books.

Reporting is not required because the market may change and the investment may not be a loss when it is eventually sold (adjusting the value with the market is called “mark-to-market” accounting). SVB looked like it was stable even though it was not because it had too much money tied up in long term, low interest investments. Some sharp people in Silicon Valley realized this problem, and this realization plus startups needing day-to-day cash caused an unusual number of SVB customers to withdraw their money from SVB early last week.

On Wednesday, March 8, SVB needed cash to cover the withdrawals and sold a ton of investments for a $1.8 billion loss because those investments were locked in at 1.7% interest and the current interest rate was 3.9%. SVB needed money to cover that loss, and, on Thursday, March 9, SVB announced a $2.25 billion stock sale. This announcement caused people, and the Feds, to realize SVB was a dumpster fire. But wait, and to have some legal news angle, SVB executives managed to find time to sell a bunch of their SVB stock in the past few weeks to make millions before the bank failed. Hopefully they are prosecuted as vigorously as the $120,000 paid to Stormy Daniels.

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About the Author

Mitchell Driskell practices law with the Tannehill Carmean firm and has been an Oxford lawyer for twenty-two years. You can call him at 662.236.9996 and email him at He practices criminal law, civil law, and family law.

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