New York
Attorney
General
Letitia
James
speaks
during a
press
conference,
Wednesday,
Sept.
21,
2022, in
New
York.
New
York’s
attorney
general
sued
former
President
Donald
Trump
and his
company
on
Wednesday,
alleging
business
fraud
involving
some of
their
most
prized
assets,
including
properties
in
Manhattan,
Chicago
and
Washington,
D.C. (AP
Photo/Brittainy
Newman) |
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FILE -
President-elect
Donald
Trump,
left,
his
chief
financial
officer
Allen
Weisselberg,
center,
and his
son
Donald
Trump
Jr.,
right,
attend a
news
conference
at Trump
Tower in
New
York, on
Jan. 11,
2017.
New
York’s
attorney
general
sued
former
President
Donald
Trump
and his
company
on
Wednesday,
alleging
business
fraud
involving
some of
their
most
prized
assets,
including
properties
in
Manhattan,
Chicago
and
Washington,
D.C. (AP
Photo/Evan
Vucci,
File) |
|
Trump Is
Sued for
Fraud By
New York
State
A.G.
Letitia
James
By Jonah
E.
Bromwich,
William
K.
Rashbaum,
and Ben
Protess
nytimes.com
NEW YORK
- Donald
J.
Trump,
his
family
business,
and
three of
his
children
lied to
lenders
and
insurers
for more
than a
decade,
according
to the
New York
attorney
general,
Letitia
James,
who
accused
him of
fraudulently
overvaluing
his
assets
by
billions
of
dollars
in a
sprawling
scheme.
She is
seeking
to bar
the
Trumps
from
ever
running
a
business
in the
state
again.
Ms.
James
concluded
in a
sweeping
lawsuit
filed on
Wednesday
that Mr.
Trump
and his
family
business
violated
several
state
criminal
laws and
“plausibly”
broke
federal
criminal
laws as
well.
Her
office,
which in
this
case
lacks
authority
to file
criminal
charges,
referred
the
findings
to
federal
prosecutors
in
Manhattan;
it was
not
immediately
clear
whether
the U.S.
attorney
would
investigate.
The
220-page
lawsuit,
filed in
New York
State
Supreme
Court,
lays out
in new
and
startling
detail
how,
according
to Ms.
James,
Mr.
Trump’s
annual
financial
statements
were a
compendium
of lies.
The
statements,
yearly
records
that
include
the
company’s
estimated
value of
his
holdings
and
debts,
wildly
inflated
the
worth of
nearly
every
one of
his
marquee
properties
— from
Mar-a-Lago
in
Florida
to Trump
Tower
and 40
Wall
Street
in
Manhattan,
according
to the
lawsuit.
The
company
also
routinely
spurned
the
assessments
of
outside
experts:
After a
bank
ordered
an
appraisal
that
found 40
Wall
Street
was
worth
$200
million,
the
Trumps
promptly
valued
it at
well
over
twice
that
number.
Overall,
the
lawsuit
said
that 11
of Mr.
Trump’s
annual
financial
statements
included
more
than 200
false
and
misleading
asset
valuations.
“The
number
of
grossly
inflated
asset
values
is
staggering,
affecting
most if
not all
of the
real
estate
holdings
in any
given
year,”
according
to the
lawsuit.
Ms.
James, a
Democrat
who is
running
for
re-election,
filed
the
lawsuit,
which
comes
just
weeks
after
the
former
president
refused
to
answer
hundreds
of
questions
under
oath in
an
interview
with Ms.
James’s
office.
Mr.
Trump
has long
used his
net
worth to
construct
a public
persona
as a
self-made
billionaire,
an image
that
underpinned
his
initial
run for
the
White
House.
But,
according
to Ms.
James,
he had a
financial
motivation
for
inflating
his
property
values.
His
company,
the
Trump
Organization,
provided
the
fraudulent
financial
statements
to
lenders
and
insurers,
her suit
said,
“to
obtain
beneficial
financial
terms,”
including
lower
interest
rates
and
lower
premiums.
All
told,
Ms.
James
said, he
was able
to
obtain a
quarter
of a
billion
dollars
in
ill-gotten
gains,
money
that she
now
wants
the
company
to
forfeit.
In a
statement,
the
Trump
Organization
noted
that the
company’s
lenders
“profited
handsomely
— to the
tune of
hundreds
of
millions
of
dollars
in
interest
and
fees”
from
their
dealings
with the
company.
The
statement
also
attributed
Ms.
James’s
action
to
“politics,
pure and
simple,”
arguing
that she
“put her
own
political
ambitions
ahead of
the
safety
of New
Yorkers,”
calling
it “an
abhorrent
abuse of
power,
waste of
valuable
resources
and tens
of
millions
of
taxpayer
dollars.”
Mr.
Trump’s
lawyer,
Alina
Habba,
called
the
lawsuit
“an
abuse of
authority”
and said
“we look
forward
to
defending
our
client
against
each and
every
one of
the
attorney
general’s
meritless
claims.”
Alan S.
Futerfas,
a lawyer
for
Ivanka
Trump
and
Donald
Trump
Jr., did
not
immediately
comment.
But on
Twitter,
Donald
Trump
Jr.
wrote
that Ms.
James
was
“Weaponizing
her
office
to go
after
her
political
opponents!”
Ms.
James,
who has
become
one of
Mr.
Trump’s
primary
antagonists,
is
looking
to
extract
a steep
price
from the
former
president
and his
company.
Her
lawsuit
asks a
judge to
appoint
an
independent
monitor
to
oversee
the
company’s
financial
practices,
while
ousting
the
Trumps
from the
leadership
of their
family
business;
Ms.
James is
also
seeking
to
prevent
the
family
from
acquiring
real
estate
in New
York for
five
years in
the
event
the
company
reinvents
itself
in
Florida
or
elsewhere.
If she
is
successful,
Mr.
Trump
and his
children
who are
named as
defendants
— Eric,
Ivanka
and
Donald
Trump
Jr. —
will
also be
permanently
barred
from
serving
as
officers
or
directors
in any
New York
company,
essentially
chasing
them out
of the
state.
While
Ms.
James
stopped
short of
trying
to
dissolve
the
Trump
Organization
altogether,
she
wants to
shut
down at
least
some of
his New
York
operations.
Yet her
case
against
him
could be
difficult
to
prove.
Property
valuations
are
often
subjective,
and the
financial
statements
include
a
disclaimer
stating
that
they
have not
been
audited.
And if
there
were a
trial,
his
lawyers
would
most
likely
emphasize
that
Deutsche
Bank and
Mr.
Trump’s
other
lenders
were
hardly
victims;
all of
his
loans
are
either
current
or were
paid
off,
some
early.
Mr.
Trump
also
famously
does not
use
email,
so any
instructions
he might
have
given
his
employees
about
the
company’s
financial
statements
might
not be
in
writing.
The lack
of a
damning
email —
or a
witness
inside
his
company
willing
to
testify
against
him —
might
complicate
her
effort
to show
that he
intentionally
used his
financial
statements
to
defraud
lenders
and
insurers.
Construction
workers
removed
the
Trump
branding
from
what was
the
Trump
International
Hotel
after
Mr.
Trump
completed
the sale
of the
hotel in
May.
Credit...Kenny
Holston
for The
New York
Times
While
Mr.
Trump
has
often
leveraged
law
enforcement
scrutiny
to
portray
himself
as a
political
martyr
and to
raise
money
from his
supporters,
Ms.
James’s
lawsuit
strikes
at the
foundation
of his
public
image
and his
sense of
self.
Its
detailed
dissection
of Mr.
Trump’s
financial
statements
suggests
that the
success
he has
attributed
to
financial
savvy
and
business
acumen
are
instead
the
product
of fraud
and
chicanery.
There
was the
Westchester
County
golf
club
that was
valued
as if it
had
charged
hefty
initiation
fees
that
were
never
actually
collected;
the
“cash”
that Mr.
Trump
counted
as his
own even
though
it
belonged
to one
of his
partners
in a
commercial
real
estate
venture;
and the
pretense
that his
Mar-a-Lago
club and
home and
his golf
course
in
Scotland
could
make
money
from
lucrative
residential
development,
even
though
Mr.
Trump
and his
family
business
had
entered
agreements
limiting
their
ability
to do
so.
In yet
another
example
cited in
the
case,
the
Trump
Organization
starkly
overvalued
a group
of
rent-stabilized
apartments
in its
building
on Park
Avenue
that
Donald
Trump
Jr. once
described
as being
“the
bane” of
his
existence.
Instead
of
acknowledging
that the
value of
some
apartments
was
capped
in the
building,
Trump
Park,
the
company
listed
the
overall
residential
units as
worth
$292
million,
multiplying
by six
the
figure
that
appraisers
had
assigned
to the
building’s
residential
units
and
storage
spaces.
The
lawsuit
compounds
Mr.
Trump’s
legal
woes. He
is
facing a
number
of
criminal
investigations
focused
on his
conduct
in the
final
weeks of
his
presidency:
Last
month,
the
F.B.I.
searched
Mar-a-Lago
as part
of an
investigation
into his
removal
of
sensitive
material
from the
White
House;
federal
prosecutors
are
investigating
his
efforts
to
reverse
his 2020
election
loss;
and a
Georgia
district
attorney
is
conducting
a
criminal
investigation
into his
potential
election
interference
in the
state.
Mr.
Trump
has cast
each
inquiry
as part
of a
never-ending
“witch
hunt”
and
denied
all
wrongdoing.
It is
unclear
whether
he will
be
criminally
charged
as a
result
of any
of them.
The
authorities
in New
York
have
been
investigating
Mr.
Trump
and his
family
business
since
2018,
when the
Manhattan
district
attorney’s
office
opened
an
investigation
into the
then-president.
The
following
year,
Ms.
James’s
civil
inquiry
began,
and both
offices
began to
zero in
on the
way that
Mr.
Trump’s
company
valued
its
assets.
As part
of its
investigation,
the
Manhattan
district
attorney
pressured
the
Trump
Organization’s
chief
financial
officer,
Allen H.
Weisselberg,
to turn
on his
longtime
employer
and
began to
focus on
lucrative
off-the-books
perks he
received
from the
company.
When Mr.
Weisselberg
declined
to
cooperate
with
prosecutors,
the
office
charged
him and
the
Trump
Organization
with a
yearslong
scheme
to avoid
paying
taxes on
those
benefits.
The
company
is
scheduled
to go to
trial in
October;
Mr.
Weisselberg,
who is
also a
defendant
in Ms.
James’s
suit,
pleaded
guilty
to 15
felonies
and
agreed
to
testify
at the
trial,
putting
the
company
at a
significant
disadvantage.
His
lawyer,
Mary E.
Mulligan,
declined
to
comment.
The
Manhattan
criminal
investigation,
which
lawyers
from Ms.
James’s
office
are
participating
in, has
not
resulted
in
charges
against
Mr.
Trump,
and he
has not
been
accused
of any
wrongdoing.
Early
this
year,
the
Manhattan
district
attorney,
Alvin L.
Bragg,
instructed
prosecutors
to halt
their
effort
to seek
an
indictment
of Mr.
Trump
after he
and his
aides
developed
concerns
about
the
strength
of a
criminal
case,
which
would
have a
higher
bar of
proof
than a
civil
case
like Ms.
James’s
and in
which
prosecutors
would
have to
show
intent.
Their
investigation
has
continued
but does
not
appear
likely
to
result
in
charges
against
Mr.
Trump in
the
foreseeable
future.
Ms.
James
does not
have the
authority
to
indict
Mr.
Trump.
But a
footnote
in the
lawsuit
said she
provided
her
findings
to the
office
of the
United
States
Attorney
for the
Southern
District
of New
York,
noting
that the
conduct
detailed
in the
complaint
appears
to
violate
federal
law,
specifically
bank
fraud
and
false
statements
to a
bank.
In a
brief
statement,
a
spokesman
for the
U.S.
attorney’s
office,
Nicholas
Biase,
said,
“We are
aware of
the New
York
attorney
general’s
referral,
and
beyond
that
decline
to
comment
further.”
The
lawsuit
also
said
that
misrepresentations
in the
financial
statements
violated
“a host
of state
laws.”
Asked
about
the
possibility
of state
charges,
the
Manhattan
district
attorney,
Alvin L.
Bragg,
said in
a
statement
that,
“Our
criminal
investigation
concerning
former
President
Donald
J.
Trump,
the
Trump
Organization,
and its
leadership
is
active
and
ongoing.”
The
lawsuit
represents
the
culmination
of a
contentious
yearslong
civil
investigation
that Mr.
Trump
and his
lawyers
sought
to
thwart
and
delay at
nearly
every
turn.
In
April, a
New York
State
judge
held Mr.
Trump in
contempt
of court
for
failing
to fully
comply
with a
subpoena
from Ms.
James
seeking
some of
his
personal
records.
The
judge,
Arthur
F.
Engoron,
eventually
lifted
the
contempt
order,
but only
after
Mr.
Trump
paid a
$110,000
penalty.
Justice
Engoron
also
ordered
Mr.
Trump,
as well
as
Ivanka
and
Donald
Trump
Jr., to
face
questioning
under
oath
from Ms.
James’s
investigators.
(Eric
Trump
was
previously
questioned
for the
investigation,
during
which he
repeatedly
invoked
his
Fifth
Amendment
right
against
self-incrimination.)
And in
May, a
New York
State
appeals
court
panel
unanimously
upheld
that
ruling,
forcing
Mr.
Trump
and his
children
to sit
for
depositions.
The
string
of
losses
for Mr.
Trump
appeared
to
embolden
Ms.
James
and
clear a
path for
her
lawsuit,
which
had
seemed
imminent
for
months.
Early
this
year,
Ms.
James
outlined
the
contours
of her
case in
court
papers,
and
disclosed
in one
filing
that Mr.
Trump’s
longtime
accounting
firm cut
ties
with the
former
president
and
essentially
retracted
a
decade’s
worth of
his
financial
statements.
The
firm,
Mazars
USA,
compiled
the
financial
statements
based on
information
from Mr.
Trump
and his
company,
which
“engaged
in
conduct
intended
to
mislead
Mazars
in
connection
with its
work
compiling
the
statements,
including
by
concealing
important
information,”
the
lawsuit
contends.
Mr.
Trump’s
lead
accountant
testified
under
oath in
a
deposition
that he
was
“shocked
by the
size of
the
discrepancy”
between
the
value
for the
rent
stabilized
units at
Trump
Park
listed
in a
2010
outside
appraisal
and the
value
the
Trump
Organization
assigned
to the
units.
He also
testified
that he
would
not have
issued
the
statements
with the
asset
values
the
company
provided
for the
building
if he
had been
told
about
the 2010
appraisal,
as well
as one
in 2020,
or the
fact
that
several
units
were
rent
stabilized.
In some
years,
Mr.
Trump’s
financial
statements
contained
clear
contradictions,
according
to the
lawsuit.
His golf
clubs,
for
example,
derived
some of
their
value
from Mr.
Trump’s
“brand
premium”
—
despite
the
annual
statement
“expressly
advising”
that the
worth of
his
brand
was not
included
in the
figures.
In
fighting
the
case,
Mr.
Trump’s
lawyers
will
likely
point
out the
disclaimer
in his
financial
statements
saying
that
Mazars
had not
audited
the
valuations.
They
also
would
likely
argue
that the
Trump
Organization
submitted
the
statements
to
sophisticated
financial
institutions
that
conducted
their
own due
diligence
and
profited
in their
dealings
with Mr.
Trump.
“While
the job
of the
attorney
general
is to
protect
the
interests
of the
public,
today’s
filing,
for the
first
time in
the
history
of the
attorney
general’s
office,
seeks to
protect
the
interests
of
large,
sophisticated
Wall
Street
banks,”
the
company’s
statement
on
Wednesday
said.
Anticipating
this
defense,
the
lawsuit
contends
that Mr.
Trump’s
valuations
“cannot
be
brushed
aside or
excused
as
merely
the
result
of
exaggeration
or good
faith
estimation
about
which
reasonable
real
estate
professionals
may
differ.”
Instead,
the
lawsuit
argued,
the
Trumps
used
“objectively
false
assumptions
and
blatantly
improper
methodologies
with the
intent
and
purpose
of
falsely
and
fraudulently
inflating
Mr.
Trump’s
net
worth.”
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