New York Attorney General Letitia James’s 222-page lawsuit against Donald Trump, his three children, and a slew of his organizations (plus Allen Weisselberg, who recently pleaded guilty to 15 crimes in a separate but factually related criminal case brought by the Manhattan District Attorney) reads like the definitive tome of the Trump family’s financial shadiness. Its seven-count civil complaint reflects the work of a three-year investigation involving over 65 witnesses and millions of pages of documents, yet covering a single decade of Trump’s career, 2011 to 2021. Although a trial date is likely years off, Trump has reason to worry that the law might actually stick this time around.
Bottom line: The state of New York alleges that the defendants, in their dealings with banks and insurance companies, grossly and fraudulently inflated their assets by billions of dollars—over 200 separate times—in order “to induce banks to lend money to the Trump Organization on more favorable terms than would otherwise have been available to the company, to satisfy continuing loan covenants, and to induce insurers to provide insurance coverage for higher limits and at lower premiums.” According to the complaint, these asset evaluations were all done internally, so Trump can’t readily rely an it-wasn’t-me defense.
New York statutory law forbids “repeated fraudulent or illegal acts . . . in the carrying on, conducting or transaction of business,” but James doesn’t just allege civil fraud. She also claims that the Trumps “repeatedly and persistently violated” three New York penal (i.e., criminal) laws, and that the defendants engaged in multiple conspiracies to falsify business records and financial statements, and to commit insurance fraud—that is, that Trump, Don Jr., Eric, Ivanka, and Weisselberg together agreed “to falsify the Statements of Financial Condition, supporting data spreadsheets, and other business records,” to make “materially inaccurate written instruments purporting to describe Donald Trump’s financial condition,” and to submit “materially false information” “in support of insurance applications” with the requisite intent for that conduct to violate the law.
The current Manhattan D.A., Alvin L. Bragg, has indicated that the related criminal investigation started by his predecessor, Cyrus R. Vance Jr., is continuing, but there is no expectation these days that Bragg will indict Donald Trump himself. Criminal cases trigger a higher standard of proof than civil ones, which are less likely to require evidence of a defendant’s actual knowledge or intent. However, James reportedly passed along the entire package to the U.S. Attorney’s Office for the Southern District of New York and the IRS, which do not have jurisdiction over state law crimes but could investigate whether these actions amount to crimes under federal law. (Note that the banks involved are insured by the Federal Deposit Insurance Corporation, and it’s a federal crime to make false statements to a financial institution.) Of course, Attorney General Merrick Garland already has his hands full with DOJ’s weighty investigation into Trump’s theft of classified materials from the White House retrieved by the FBI from Trump’s Mar-a-Lago resort in August. Garland is also probing Trump’s outsized role in the ongoing criminal investigation into the January 6th attack on the Capitol.
Here’s just a tiny sampling of the lawsuit’s many intriguing factual allegations:
- A bank-ordered appraisal valued the Trump Building at 40 Wall Street at $200 million in August 2010 and $220 million in November 2012. Yet in their statements of financial condition, Trump and the Trump Organization listed its value at $524 million in 2011, $527 million in 2012, and $530 million in 2013—more than double the value calculated by outside professional appraisers using the same underlying information.
- Trump’s triplex apartment in Trump Tower is 10,996 square feet, but in 2015 he calculated it as 30,000 square feet in size and valued it at $29,738 per square foot for a total value of $327 million. At that time, only one apartment in New York City had sold for $100 million, at less than $10,000 per square foot. In Trump Tower itself, the most any property had gone for was $4,500 per square foot.
- In 2011 and 2012 financial statements, the defendants valued a cluster of apartments at Trump Park Avenue at nearly $50 million. But those units were rent stabilized, and thus judged by an appraiser in 2010 to be worth only $750,000.
- In 2016, the defendants valued Mar-a-Lago based on a price-per-acre figure that was 120 percent greater than the prior year’s figure, using a purportedly comparable 1.61-acre property owned by the Trump Organization that sold for $49.9 million. Except it turns out that that other property was actually 2.61 acres, and the Trump Organization had used that correct figure in prior years. The discrepancy had the effect of increasing the 2016 value of that comparable property from $19.1 million to over $30 million and greatly inflating the reported value of Mar-a-Lago.
- A tract of undeveloped land owned by Trump in Aberdeen, Scotland, was estimated at a value of $119 million in 2011, “based on nothing more than an unsubstantiated quote prepared by a Trump Organization employee for Forbes”
Recall that Trump’s accounting firm, Mazars USA, announced in a February 2022 letter that it could no longer stand behind a decade of annual financial statements it prepared for the Trump Organization because of material discrepancies in the information the defendants provided as well as the actual value of the assets. Mazars undoubtedly knows that, unlike evidence in the form of verbal human testimony, documents and electronic communications cannot die, cannot lie, and cannot misremember.
James’s lawsuit has serious financial implications for the Trumps and the Trump Organization (though it cannot produce jail time). If she succeeds at trial, James seeks to have the corporate certificates of every entity controlled or beneficially owned by Trump under New York law canceled. Meaning those businesses as currently constituted will cease to exist. They include, at a minimum, the businesses named as defendants in the case, including Trump Organization, Inc., the real estate development company that owns and operates buildings, hotels, golf clubs, restaurants, and casinos, and his Seven Springs golf resort in Bedford, New York. The complaint also aims to wrest control of the companies from the Trump family and give it to an “independent monitor” for at least the next five years; replace the current trustees of the Trump Revocable Trust (which include Don Jr. and Weisselberg); bar Trump and the Trump Organization “from entering into any New York State commercial real estate acquisitions” for five years and from “applying for loans from any financial institution chartered by or registered with the New York Department of Financial Services” for five years; and “permanently bar Mr. Trump, Donald Trump, Jr., Ivanka Trump, and Eric Trump from serving as an officer or director in any New York corporation or similar business entity registered and/or licensed in New York State.”
But this request from James is the biggie:
Awarding disgorgement of all financial benefits obtained by each Defendant from the fraudulent scheme, including all financial benefits from lenders and insurers through repeated and persistent fraudulent practices of an amount to be determined at trial but estimated to be $250,000,000, plus . . . interest.
James wants Trump to pay back the investors and insurance companies. According to Forbes, Trump is worth in the neighborhood of $3 billion. The implications of the lawsuit for Trump’s financial future are nonetheless significant.
Assuming the lawsuit eventually goes to trial, how is it likely to turn out? Ask yourself whether, as a matter of logic and common sense, a jury might be persuaded that Team Trump was lying making inflated claims to the banks and insurance companies. Unlike the millions of regular Americans who routinely and dutifully tell the truth on financial forms—else they risk serious civil and criminal liability—Donald Trump’s actions reflect a lifetime of unaccountability and “come-and-get-me” tactics. Thus far, they’ve worked. We’ll just have to wait and see whether Letitia James finally puts an end to Trump’s winning streak against the rule of law.