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Judge: Trump Defrauded Banks, Insurers 09/27 06:14
A judge ruled Tuesday that Donald Trump committed fraud for years while
building the real estate empire that catapulted him to fame and the White
House, and he ordered some of the former president's companies removed from his
control and dissolved.
NEW YORK (AP) -- A judge ruled Tuesday that Donald Trump committed fraud for
years while building the real estate empire that catapulted him to fame and the
White House, and he ordered some of the former president's companies removed
from his control and dissolved.
Judge Arthur Engoron, ruling in a civil lawsuit brought by New York Attorney
General Letitia James, found that Trump and his company deceived banks,
insurers and others by massively overvaluing his assets and exaggerating his
net worth on paperwork used in making deals and securing loans.
Engoron ordered that some of Trump's business licenses be rescinded as
punishment, making it difficult or impossible for them to do business in New
York, and said he would continue to have an independent monitor oversee Trump
Organization operations.
If not successfully appealed, the order would strip Trump of his authority
to make strategic and financial decisions over some of his key properties in
the state.
Trump, in a series of statements, railed against the decision, calling it
"un-American" and part of an ongoing plot to damage his campaign to return to
the White House.
"My Civil rights have been violated, and some Appellate Court, whether
federal or state, must reverse this horrible, un-American decision," he wrote
on his Truth Social site. He insisted his company had "done a magnificent job
for New York State" and "done business perfectly," calling it "A very sad Day
for the New York State System of Justice!"
Trump's lawyer, Christopher Kise, said they would appeal, calling the
decision "completely disconnected from the facts and governing law."
Engoron's ruling, days before the start of a non-jury trial in James'
lawsuit, is the strongest repudiation yet of Trump's carefully coiffed image as
a wealthy and shrewd real estate mogul turned political powerhouse.
Beyond mere bragging about his riches, Trump, his company and key executives
repeatedly lied about them on his annual financial statements, reaping rewards
such as favorable loan terms and lower insurance costs, Engoron found.
Those tactics crossed a line and violated the law, the judge said, rejecting
Trump's contention that a disclaimer on the financial statements absolved him
of any wrongdoing.
"In defendants' world: rent regulated apartments are worth the same as
unregulated apartments; restricted land is worth the same as unrestricted land;
restrictions can evaporate into thin air; a disclaimer by one party casting
responsibility on another party exonerates the other party's lies," Engoron
wrote in his 35-page ruling. "That is a fantasy world, not the real world."
Manhattan prosecutors had looked into bringing criminal charges over the
same conduct but declined to do so, leaving James to sue Trump and seek
penalties that aim to disrupt his and his family's ability to do business.
Engoron's ruling, in a phase of the case known as summary judgment, resolves
the key claim in James' lawsuit, but several others remain. He'll decide on
those claims and James' request for $250 million in penalties at a trial
starting Oct. 2. Trump's lawyers have asked an appeals court for a delay.
"Today, a judge ruled in our favor and found that Donald Trump and the Trump
Organization engaged in years of financial fraud," James said in a statement.
"We look forward to presenting the rest of our case at trial."
Trump's lawyers, in their own summary judgment bid, had asked the judge to
throw out the case, arguing that there wasn't any evidence the public was
harmed by Trump's actions. They also argued that many of the allegations in the
lawsuit were barred by the statute of limitations.
Engoron, noting that he had rejected those arguments earlier in the case,
equated them to the plot of the film "Groundhog Day." He fined five defense
lawyers $7,500 each as punishment for "engaging in repetitive, frivolous"
arguments, but denied James' request to sanction Trump and other defendants.
James, a Democrat, sued Trump and the Trump Organization a year ago,
accusing them of routinely inflating the value of assets like skyscrapers, golf
courses and his Mar-a-Lago estate in Florida, padding his bottom line by
billions.
Engoron found that Trump consistently overvalued Mar-a-Lago, inflating its
value on one financial statement by as much as 2,300%. The judge also rebuked
Trump for lying about the size of his Manhattan apartment. Trump claimed his
three-story Trump Tower penthouse was nearly three times its actual size,
valuing it at $327 million.
"A discrepancy of this order of magnitude, by a real estate developer sizing
up his own living space of decades, can only be considered fraud," Engoron
wrote.
On X in the wake of the ruling, Eric Trump insisted his father's claims
about Mar-a-Lago were correct, writing that the Palm Beach estate is
"speculated to be worth well over a billion dollars making it arguably the most
valuable residential property in the country." He called the ruling and the
lawsuit "an attempt to destroy my father and kick him out of New York."
Under the ruling, limited liability companies that control some of Trump's
key properties, such as 40 Wall Street, will be dissolved and authority over
how to run them handed over to a receiver. Trump would lose his authority over
whom to hire or fire, whom to rent office space to, and other key decisions.
"The decision seeks to nationalize one of the most successful corporate
empires in the United States and seize control of private property all while
acknowledging there is zero evidence of any default, breach, late payment or
any complaint of harm," Kise said after the decision.
James' lawsuit is one of several legal headaches for Trump, the Republican
front-runner in next year's election. He has been indicted four times in the
last six months -- accused in Georgia and Washington, D.C., of plotting to
overturn his 2020 election loss, in Florida of hoarding classified documents,
and in Manhattan of falsifying business records related to hush money paid on
his behalf.
The Trump Organization was convicted of tax fraud last year in an unrelated
criminal case for helping executives dodge taxes on perks such as apartments
and cars. The company was fined $1.6 million. One executive, Trump's longtime
finance chief Allen Weisselberg, pleaded guilty and served five months in jail.
James' office previously sued Trump for misusing his charitable foundation
to further his political and business interests. Trump was ordered to give $2
million to charity as a fine while his own charity, the Trump Foundation, was
shut down.
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