New York AG Letitia James sues Trumps, their business for alleged fraud

NEW YORK — New York Attorney General Letitia James filed a lawsuit Wednesday accusing former president Donald Trump, three of his grown children and executives at his company of flagrantly manipulating property valuations to deceive lenders, insurance brokers and tax authorities into giving them better bank-loan and insurance policy rates and to reduce their tax liability.

The 222-page civil complaint asks the New York Supreme Court to bar Trump, as well as Donald Trump Jr., Ivanka Trump and Eric Trump, from serving as executives at any company in New York, and to bar the Trump Organization from acquiring any commercial real estate or receiving loans from any New York-registered financial institution for five years.

It seeks to recover more than $250 million in what James’s office says are ill-gotten gains received through the alleged deceptive practices. While the lawsuit itself is not a criminal prosecution, James said she has referred possible violations of federal law to the Justice Department and the IRS.

Trump and his family have repeatedly called James’s inquiry a “witch hunt,” pointing to statements James (D) made on the campaign trail in which she promised to investigate him. They have denied any wrongdoing.

“Today’s filing is neither focused on the facts nor the law – rather, it is solely focused on advancing the Attorney General’s political agenda,” Trump attorney Alina Habba said in a statement on Wednesday. “We are confident that our judicial system will not stand for this unchecked abuse of authority, and we look forward to defending our client against each and every one of the Attorney General’s meritless claims.”

Read the lawsuit filed against Donald Trump, 3 of his children and Trump Organization

The lawsuit, filed in New York Supreme Court, is the result of a more than two-year investigation by James. It names 23 properties in the Trump Organization portfolio, including his Mar-a-Lago Club in Florida, his Seven Springs estate in Westchester County, N.Y., and the D.C. hotel located in the Old Post Office building on Pennsylvania Avenue NW, which he leased from the federal government until he sold it in May.

“The inflated asset valuations in the Statements cannot be brushed aside or excused as merely the result of exaggeration or good faith estimation about which reasonable real estate professionals may differ,” the lawsuit says.

The complaint adds to a deepening list of legal challenges that Trump faces more than 18 months after he left the White House and at a time when he remains actively involved in Republican politics and has broadly suggested he will run for president again in 2024. The Justice Department is investigating the possible mishandling of classified documents at Mar-a-Lago and the role of Trump and his close advisers in trying to overturn the results of the 2020 election; state authorities in Georgia and the House select committee on Jan. 6 have also launched wide-ranging probes into events surrounding the election.

The status of key investigations involving Donald Trump

In addition to naming Trump and three of his children personally, the suit names the Trump Organization and Allen Weisselberg, Trump’s longtime chief financial officer who recently pleaded guilty to tax crimes, and controller Jeffrey McConney.

If the New York Supreme Court were to bar the Trump Organization from acquiring any real estate or taking on any loans, as the attorney general has requested, it’s unclear how the company could continue to operate, even without the Trumps at the helm.

Trump’s former charitable organization, the Trump Foundation, dissolved in 2018 after a lawsuit by then-New York attorney general Barbara D. Underwood (D), which alleged that the organization had engaged in self-dealing and campaign finance violations. Findings from that case were also sent to the IRS.

James’s lawsuit accuses accused Trump, his family and Trump Organization executives of employing a wide array of fraudulent maneuvers in their dealings with lenders and regulators despite knowing that they were illegal. The suit highlights Trump’s practice of distributing statements of financial condition inflating the values of his properties and sometimes exaggerating how many acres those properties cover or whether homes could be built on them — and if so, how many.

Defense attorneys have said in court that commercial real estate firms routinely argue for lower tax appraisals and that the company’s conduct was no different, but James said Wednesday that the misstated valuations cannot be brushed as a “good faith mistake.”

The former president and his family should be held to the same standards as everyday Americans, James said at a news conference in Manhattan, noting that it is illegal for people to lie to banks in order to secure college loans for their or get a home mortgage.

“Claiming you have money that you do not have does not amount to the art of the deal. It’s the art of the steal,” James said, mocking the titled of Donald Trump’s 1987 book. “There cannot be different rules for different people in this country or in this state.”

The complaint argues that the estimated $100 million or more Trump made on the sale of his D.C. hotel lease was ill-gotten because he allegedly obtained the lease by knowingly providing fraudulent information about his business. It also alleges Trump was aware that his Trump Park Avenue complex in Manhattan was not worth anywhere near what he claimed because some of the units were rent-stabilized.

Trump team claimed boxes at Mar-a-Lago contained only news clippings

The lawsuit claims that Trump Organization received favorable tax treatment and sometimes easements at properties including Mar-a-Lago in exchange for limits on future development, but intentionally omitted those limits when valuing Trump-owned properties for lenders.

No bank or insurance company has publicly alleged it was defrauded by Trump in doing business with him. And the federal government approved the sale of the D.C. hotel lease earlier this year — a deal for which Trump and Ivanka Trump allegedly cited the information that James claims is fraudulent.

Trump has been approved to refinance loans of several of his properties since leaving office in early 2021, including a $100 million loan on Trump Tower that he refinanced in February and a loan on his Doral golf club in Florida.

But there is evidence in the lawsuit that some of Trump’s partners inquired with his company about whether the information it had provided for those loan deals was accurate.

In December, 2020, after allegations about potentially false information in the financial statements became public, Deutsche Bank officials wrote to Trump Organization officials to say that providing any “false or misleading” information to the bank constituted a default, the lawsuit says. A Trump Organization attorney allegedly responded by saying he would have an answer “within the next few days.” But according to the complaint, the company did not respond once the bank followed up.

The Trump Organization paid off one Deutsche Bank loan when it sold the D.C. hotel lease. It also refinanced the Deutsche debt on its Doral resort.

Justice Dept. filing points to new legal jeopardy for Trump and his lawyers, experts say

James and then-Manhattan District Attorney Cyrus Vance Jr. (D) opened parallel investigations into Trump’s business practices in 2019 after former Trump insider Michael Cohen gave testimony to Congress about his longtime boss’s use of false statements of net worth for official purposes.

Unlike James’s civil inquiry, the probe by the district attorney’s office was criminal in nature, involving a grand jury and — potentially — criminal charges. Prosecutors must meet a higher legal bar for such charges than are required for a lawsuit. The criminal investigation appeared to be winding down earlier this year; two veteran prosecutors resigned, with one of them citing frustration that Vance’s successor, District Attorney Alvin Bragg, had not signed off on an indictment of Trump or his family.

But Bragg said Wednesday that the investigation remains “active and ongoing.” The criminal case against Weisselberg, which resulted in a guilty plea, stemmed from the district attorney’s probe. And the Trump Organization has been charged with tax-related crimes as part of the same inquiry and is scheduled for trial this fall.

Over the summer, James’s investigators took depositions from Trump himself and two of his adult children — Ivanka Trump and Donald Trump Jr. — both of whom have served as executives at the company.

Trump asserted his Fifth Amendment right to avoid answering questions that could incriminate him criminally more than 400 times when he sat for a session at James’s lower Manhattan office on Aug. 10 — two days after a court-approved FBI search of Mar-a-Lago as part of the criminal probe into the potential mishandling of documents.

Ivanka Trump and Donald Trump Jr. responded to James’s questions during lengthy depositions, but their sibling Eric Trump, who was deposed in October 2020, also invoked the Fifth.

This is a developing story. It will be updated.

O’Connell reported from Washington. Josh Dawsey in Washington contributed to this report.

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