The former president of the United States, three of his adult children, and his firm are the targets of a civil fraud action brought by the attorney general of New York, which claims they conspired for ten years to inflate the worth of their assets and make $250 million in ill-gotten gains.
The democratic critic of Mr. Trump, Letitia James, claims that from 2011 to 2021, Mr. Trump’s financial records had 200 inaccurate and deceptive assessments for 23 different properties and assets, including homes, golf courses, and the family’s Mar-a-Lago resort in Florida. According to the lawsuit, The Trump Organization gave these assurances to lenders and insurers in exchange for favorable terms and other advantages.
At a press conference, Ms. James stated, “The lawsuit indicates that Donald Trump falsely inflated his net worth by billions of dollars to enrich himself and scam the system unjustly.”
Although the complaint is civil, it claims that the defendants broke state and perhaps federal criminal statutes, including those prohibiting bank fraud and giving false information to financial institutions. The U.S. attorney’s office for the Southern District of New York, according to Ms. James, has received a criminal referral of her office’s findings. The office was aware of the referral, according to a spokeswoman.
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Republican Mr. Trump referred to the investigation as a “witch hunt” in a social media post. Alina Habba, one of his attorneys, argued that the lawsuit’s allegations were unfounded. The complaint was described as “the climax of over three years of unrelenting, targeted, unethical political harassment” by a Trump Organization spokeswoman.
The complaint comes after a more than three-year inquiry launched by Michael Cohen’s congressional testimony in 2019. Cohen claimed that Mr. Trump repeatedly exaggerated his wealth for financial advantage. Mr. Trump had made numerous unsuccessful attempts to stop or postpone the probe.
Earlier this year, he was found in contempt of state court for disobeying one of Ms. James’s subpoenas. In August, when she deposed him, he invoked his Fifth Amendment privilege against self-incrimination and refused to respond to any questions.
Donald Trump Jr., Eric Trump, and Ivanka Trump were all listed as defendants in Ms. James’ lawsuit, along with Allen Weisselberg and Jeffrey McConney, two longstanding company officials.
Ms. James was “desperately attempting to whip up her leftwing base,” according to a tweet from Donald Trump Jr. Eric Trump charged Ms. James with having political motivations on Twitter. Mr. Weisselberg’s attorney declined to comment. Requests for a response from the three Trump children’s attorneys and Mr. McConney’s attorney went unanswered.
For businesses owned by Mr. Trump that took part in the alleged plan and the corporate entities named as defendants, the complaint calls for the cancellation of their New York business certificates. According to Ms. James, she is also attempting to permanently block Trump from holding office in any New York corporation and to give Mr.
Trump and his business have a five-year ban on commercial real estate in the state. She wants the Trump Organization to be subject to $250 million in financial penalties as well as the appointment of an impartial monitor.
The lawsuit filed on Wednesday heightens the legal difficulties confronting Mr. Trump. After leaving the White House, he battled the Justice Department over its investigation into how he handled sensitive materials.
In her complaint, Ms. James said that Trump assets, including a golf course in Scotland, an estate north of New York City called Seven Springs, and the Manhattan office building 40 Wall St., had made false statements in their financial records.
The lawsuit stated that “the inflated asset valuations in the statements cannot be dismissed or justified as just the consequence of exaggeration or good faith estimation about which reasonable real estate professionals may differ.” Instead, they are the outcome of the defendants’ use of clearly incorrect methodology and objectively wrong assumptions.
The lawsuit claims that although Mr. Trump’s financial statements, which were put together by Trump Organization employees and released by an accounting firm, claimed to have been created with independent experts, hired no such individuals to develop asset assessments.
According to Ms. James, the financial statements included cash on hand that Mr. Trump didn’t have, used different accounting principles each year, and disregarded regulations that would have reduced property prices.
The lawsuit claimed that Mr. Trump’s triplex unit in Trump Tower was 10,996 square feet smaller than the 30,000 square feet that were estimated. The $327 million appraisal that resulted in 2015, according to Ms. James, was “absurd” because, at the time, only one New York City apartment had ever sold for even $100 million.
In the residential complex known as Trump Park Avenue, a bank-ordered appraisal placed a total value of 12 rent-stabilized units at $750,000; yet, according to financial accounts from 2011 and 2012, those homes were assessed at market value for close to $50 million.
In addition, the complaint claimed that although Mr. Trump contributed residential development rights, Mar-a-value Lago’s was determined as though it were unrestricted land. According to the lawsuit, Trump overvalued their Florida property by as much as $739 million when it should have been valued at only $75 million.
Eric Trump claimed Mar-a-Lago was “probably one of the most valuable estates in the United States” on Twitter, calling the $75 million valuation “asinine.” According to Ms. James, the allegedly fraudulent property assessments encouraged insurers to offer coverage at higher limits and lower rates. They urged banks to lend money under more advantageous conditions than they otherwise would have.
The spokeswoman for the Trump Organization claimed that the banks were not only unaffected but even made handsome profits—to the tune of hundreds of millions of dollars in interest and fees—and never once voiced any concerns regarding any of the disputed loans.
In response to queries from the media, Ms. James did not wholly rule out the prospect of a settlement between the two parties, but she did not make clear the conditions she would demand. She added that her agency had previously turned down settlement proposals from Mr. Trump’s staff.
She said, “Our doors are always open.
The Manhattan district attorney’s criminal inquiry that looked into similar alleged conduct is separate from Ms. James’s civil investigation. Early this year, two prominent prosecutors left that inquiry, casting doubt on the investigation’s future. On Wednesday, a representative for the office stated that the search was still ongoing.
The Trump Organization will face trial in October for a tax fraud charge resulting from that investigation. The business entered a not-guilty plea. The former chief financial officer of the company, Mr. Weisselberg, is the other defendant in that lawsuit. He admitted to a multi-year tax evasion scheme when he entered a guilty plea to a 15-count indictment last month. He must testify in the Trump Organization’s trial per the terms of his plea deal. In that instance, Donald Trump is not a defendant.