In a landmark ruling that could have far-reaching implications for Donald Trump’s real estate business, Judge Arthur Engoron of New York has found the former U.S. President and his business entities culpable of “persistent and repeated fraud.” The ruling is part of a civil lawsuit initiated by New York Attorney General Letitia James and is set to go to trial soon. The case alleges that Trump and his businesses inflated the value of their assets to secure loans on favorable terms.
Judge Engoron determined that the Trump Organization had artificially increased the value of its properties in Manhattan and Florida, as well as its golf courses in the U.S. and Scotland, by hundreds of millions of dollars. The judge also mandated the suspension of licenses for Trump’s New York-based businesses. However, the immediate ramifications of this decision remain unclear, prompting Trump’s attorney, Christopher Kise, to seek further clarification.
The lawsuit, initiated in 2022 by Attorney General James, will proceed to trial to ascertain additional damages and to resolve whether the defendants are also liable for issuing false financial statements and committing insurance fraud. The Attorney General’s office is seeking $250 million in damages and aims to prohibit the defendants from ever serving as officers or directors of any corporation in New York State.
Donald Trump responded to the ruling via his Truth Social platform, characterizing it as a politically motivated attack by “Radical Left Democrats.” Christopher Kise, representing Trump, argued that the court’s actions amounted to an unjust seizure of private property without evidence of any financial misconduct. On the other hand, Attorney General James expressed her eagerness to present the rest of her case at trial but did not comment further.
This ruling adds to an already complex legal landscape for Trump, who is facing multiple criminal indictments on various charges, including the retention of classified documents and attempts to undermine the 2020 election results. Trump has pleaded not guilty to all these charges.
The judge’s decision elaborated on specific instances of asset inflation. For example, Trump had overvalued his Trump Tower apartment by up to $207 million and inflated the value of apartments on Park Avenue by 700%. The judge dismissed the defense’s arguments that the banks, including Deutsche Bank, were not defrauded as the loans were fully repaid.
Judge Engoron criticized Trump’s legal team for residing in a “fantasy world” and accused them of making “frivolous” arguments, leading to a fine of $7,500 for each lawyer. He emphasized that loan accounting principles dictate that interest rates rise with increased risk, suggesting that lenders could have profited more had they known the actual value of Trump’s assets.
The ruling serves as a significant setback for Trump’s business empire and adds another layer to his mounting legal challenges. It also raises questions about the ethical conduct of businesses and the veracity of their financial statements. With the trial set to commence shortly, the case could potentially result in substantial damages and restrictions on Trump and his businesses, thereby affecting his future political and business endeavors.