PHOTO: Former US President Donald Trump committed fraud for years while building the real estate empire that catapulted him to fame and the White House, a judge has ruled. ARTIE WALKER JR./AP
In a significant legal development, Judge Arthur Engoron has ruled that Donald Trump engaged in fraudulent activities spanning several years while building his real estate empire, which ultimately propelled him to fame and the White House.
The ruling comes in response to a civil lawsuit initiated by New York’s attorney general, Letitia James. In his decision, Judge Engoron concluded that Trump and his company had misled banks, insurers, and other parties by significantly inflating the value of his assets and exaggerating his net worth in documents used for various transactions and financing purposes.
As a consequence of this ruling, certain business licenses held by Trump’s companies are to be revoked, posing substantial challenges for them to conduct operations in New York. Additionally, an independent monitor will continue to oversee the activities of the Trump Organization.
A spokesperson for Donald Trump has not yet provided a response to the ruling. Trump has consistently maintained his innocence throughout the proceedings.
This ruling, which comes just days before the commencement of a non-jury trial in Attorney General Letitia James’ lawsuit, represents a forceful rejection of Trump’s carefully crafted image as a wealthy and astute real estate tycoon who transitioned into a political force.
The judge determined that Trump, his organization, and key executives not only boasted about their wealth but also repeatedly lied about it in their annual financial statements. These falsehoods resulted in favorable loan terms and reduced insurance premiums, actions that the judge deemed illegal, rejecting Trump’s assertion that a disclaimer in the financial statements absolved him of any wrongdoing.
Judge Engoron articulated in his 35-page decision, “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. That is a fantasy world, not the real world.”
While Manhattan prosecutors had explored the possibility of pursuing a criminal case related to these actions, they ultimately declined to do so, leaving Attorney General Letitia James to file a civil lawsuit against Trump and seek penalties that could disrupt his and his family’s business operations in New York.
This ruling, part of the summary judgment phase of the case, resolves the primary claim in Attorney General James’ lawsuit, but six additional claims remain pending. A non-jury trial is scheduled to begin on October 2nd to address these remaining claims and any potential penalties. James is seeking $250 million in penalties and a prohibition on Trump conducting business in his home state of New York. The trial may extend into December, according to Judge Engoron.
Trump’s legal team had previously requested the case’s dismissal, which was denied. They argued that James lacked the legal basis to file the lawsuit, as there was no evidence of harm to the public resulting from Trump’s actions. Additionally, they contended that many of the allegations were barred by the statute of limitations. Judge Engoron dismissed these arguments, characterizing them as akin to the time-loop concept from the movie “Groundhog Day.”
Attorney General Letitia James filed her lawsuit against Trump and the Trump Organization a year ago, alleging a consistent pattern of deception she dubbed “the art of the steal,” a play on the title of Trump’s 1987 business memoir, “The Art of the Deal.”
Among the allegations were Trump’s claims that his Manhattan Trump Tower apartment, featuring a three-story penthouse adorned with gold-plated fixtures, was nearly three times its actual size and valued at $327 million—a figure far surpassing the sale price of any New York City apartment. Trump also valued his Mar-a-Lago estate in Florida as high as $739 million, over ten times a more reasonable estimate of its worth. James pointed out that Trump’s valuation was based on the idea that the property could be developed for residential use, but deed restrictions prohibited such use.
Trump has consistently denied any wrongdoing, asserting in sworn testimony that the content of his financial statements was irrelevant because they carried a disclaimer stating they should not be relied upon. He told James during a deposition in April, “You don’t have a case, and you should drop this case.”
Judge Engoron rejected this argument when Trump’s defense previously sought to have the case dismissed. He emphasized that the disclaimer on the financial statements “makes abundantly clear that Trump was fully responsible for the information contained within” and that allowing blanket disclaimers to protect liars from liability would undermine the critical role such statements play in the real world.
This lawsuit is one of several legal challenges facing Trump as he contemplates a return to the White House in 2024. In the last six months, he has been indicted four times, facing accusations related to efforts to overturn his 2020 election loss in Georgia and Washington, DC, hoarding classified documents in Florida, and falsifying business records in Manhattan in connection with hush money payments.
The Trump Organization was convicted of tax fraud in an unrelated criminal case last year for aiding executives in evading taxes on perks such as Manhattan apartments and luxury cars, resulting in a $1.6 million fine. One of the implicated executives, Trump’s long-time finance chief Allen Weisselberg, pleaded guilty and served five months in jail. Weisselberg is a defendant in Attorney General James’ lawsuit and provided sworn deposition testimony for the case in May.
While James’ lawsuit does not carry the potential for imprisonment, it could complicate Trump’s ability to engage in real estate transactions and tarnish his legacy as a developer. James has requested that Judge Engoron prohibit Trump and his three eldest children from running any New York-based companies in the future. She also seeks a five-year ban on Trump and the Trump Organization participating in commercial real estate acquisitions, among other sanctions. The $250 million in penalties she is seeking represents an estimate of the benefits derived from the alleged fraud.
Attorney General Letitia James initiated her scrutiny of Trump’s business practices in March 2019, following testimony from Trump’s former personal lawyer Michael Cohen to Congress. Cohen claimed that Trump had exaggerated his wealth on financial statements submitted to Deutsche Bank while seeking financing to purchase the NFL’s Buffalo Bills. Prior to this lawsuit, James had also sued Trump for misusing his charitable foundation for personal and political gain, resulting in a $2 million fine and the shutdown of the Trump Foundation.