New York Attorney General Letitia James is facing a new lawsuit that raises concerns about her office's handling of a business fraud case decided four years ago, and a judge appointed by former President Donald Trump is overseeing the case.
The lawsuit was filed by Ariel Schachter, who served as the CFO of Northern Leasing Systems, a business that was barred from practicing leasing in New York after a court sided with James' office regarding accusations that it engaged in fraudulent and deceptive practices across the United States.
Former New York Attorney General Eric Schneiderman brought the civil case in 2016, but James continued pursuing it after she took office in 2019. Schneiderman accused the business of convincing small businesses to sign lease agreements without fully understanding the conditions, as well as misrepresenting facts about these agreements. In 2020, a court found the business liable for fraud.
Now, Schachter is seeking to open a new leasing business in Texas and has asked for a court to render that judgment unenforceable in the state, according to court documents reviewed by Newsweek.
The lawsuit was filed in the United States District Court for the Northern District of Texas Amarillo Division, where Schachter is planning to open his new business, Fresh Start Leasing LLC.
The case is being overseen by Judge Matthew J. Kacsmaryk, a Trump appointee who has built a reputation of handing down staunchly conservative rulings.
He rose to national prominence in April 2023 by ordering the U.S. Food and Drug Administration (FDA) to void its decades-long approval of mifepristone, a pill used to terminate pregnancies. The ruling set off a wave of criticism, as his detractors raised concerns about his history of anti-abortion activism.
The U.S. Supreme Court last month heard arguments challenging Kacsmaryk's ruling, with justices generally skeptical about efforts to ban the drug. James attended a rally at the court urging the justices to overturn his ruling.
Newsweek reached out to James' office for comment via email.
What Complaint Says
The complaint raises concerns about how the cases against Norther Leasing System were brought up in court.
It alleges that because the cases were special proceedings—brought pursuant to a New York law intended to provide an "expeditious means" to resolve some disputes—the defendants were deprived the opportunity to fully defend themselves. They were unable to conduct discovery to present evidence to counter the attorney general's allegations, according to the lawsuit.
Schachter, who was not named as a defendant in the first case, is now asking the court to rule that the judgments are "not entitled to full faith and credit or enforcement outside the state of New York because Schachter was denied any opportunity whatsoever to present evidence and testimony to rebut the Defendant's allegations in the summary proceeding."
James is one of three people who have held the office since the original case was filed in 2016. It mentions her by name because she is the current attorney general, but it was raised by Schneiderman.
Former Attorney General Barbara Underwood, who ascended to the office after Schneiderman's resignation, also served while the litigation was ongoing.
In June 2020, James released a press statement touting her office's victory in the case, saying that she "won a major victory" that would "deliver much needed relief to thousands of small business owners" across the country.
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Andrew Stanton is a Newsweek weekend reporter based in Maine. His role is reporting on U.S. politics and social issues. ... Read more
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