A lawsuit has been filed against New York Attorney General Letitia James, raising concerns about the way her office handled a business fraud case that was resolved four years ago. Interestingly, the case is being overseen by a judge appointed by former President Donald Trump.
Ariel Schachter, who was once the CFO of Northern Leasing Systems, has filed a lawsuit against the company. Northern Leasing Systems had been prohibited from engaging in leasing activities in New York due to allegations of fraudulent and deceptive practices. James’ office successfully argued the case, leading to the court’s decision.
Former New York Attorney General Eric Schneiderman initiated the civil case in 2016, which was later carried forward by Attorney General Letitia James when she assumed office in 2019. Schneiderman alleged that the company had deceived small businesses into signing lease agreements without fully comprehending the terms and conditions, and had also misrepresented crucial information pertaining to these agreements. In 2020, a court held the company accountable for fraud.
Schachter is now looking to establish a new leasing business in Texas and has filed a request with the court to declare that judgment unenforceable in the state, as stated in court documents reviewed by Newsweek.
Fresh Start Leasing LLC is preparing to open its new business in the Northern District of Texas Amarillo Division, prompting the filing of a lawsuit in the United States District Court.
Judge Matthew J. Kacsmaryk, a Trump appointee renowned for his staunchly conservative rulings, is presiding over the case.
In April 2023, he gained national recognition when he commanded the U.S. Food and Drug Administration (FDA) to revoke its longstanding approval of mifepristone, a pill commonly employed for pregnancy termination. This decision sparked a surge of backlash, with critics expressing apprehension about his previous involvement in anti-abortion activism.
Last month, the U.S. Supreme Court listened to arguments that questioned Kacsmaryk’s ruling. During the proceedings, the justices expressed skepticism towards the attempts to prohibit the drug. In support of overturning the ruling, James participated in a rally held at the court.
What Complaint Says
The complaint has raised concerns regarding the manner in which the court cases against Norther Leasing System were presented.
The lawsuit claims that the defendants were unable to fully defend themselves because the cases were special proceedings under New York law. These proceedings were designed to quickly resolve disputes, but as a result, the defendants were deprived of the opportunity to conduct discovery and present evidence to counter the attorney general’s allegations.
Schachter, who was not implicated as a defendant in the initial case, is currently seeking a court ruling stating that the judgments should not be recognized or enforced beyond the borders of New York. The reason behind this request is that Schachter was completely denied the opportunity to present any evidence or testimony to counter the allegations made by the Defendant during the summary proceeding.
Since the original case was filed in 2016, James is one of three individuals who have occupied the office. The mention of her by name is due to her current position as the attorney general, which was previously held by Schneiderman.
Barbara Underwood, the former Attorney General, took over the office after Schneiderman resigned and also served during the ongoing litigation.
In June 2020, James issued a press statement celebrating her office’s triumph in the case, expressing that they had achieved a significant victory that would provide much-needed relief to countless small business owners nationwide.
