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Donald Trump committed fraud, judge rules in New York civil suit

Trump’s legal team tried to toss the case, calling state prosecutors “uneducated” about the real estate business. But it was Trump, a judge found, whose professional practices veered from reality.

MANHATTAN (CN) — Judge Arthur Engoron on Tuesday sided with New York Attorney General Letitia James in her civil case against the Trump Organization, finding former President Donald Trump and his co-defendants liable for the top count in the $250 million fraud suit.

In the 35-page opinion Engoron writes that Trump for years lied to banks and insurers by overvaluing his assets to build his corporate empire. He falsely inflated his personal net worth by up to $2.2 billion every year in order to gain more favorable bank loans and lower insurance premiums, James said.

Just days ago, Trump’s legal team asked to toss the entire case, calling state prosecutors “uneducated” about the real estate business.

But it was Trump, Engoron found, whose professional practices veered from reality.

“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, granting partial summary judgment to the state attorney general. “That is a fantasy world, not the real world.” 

Trump frequently made false and misleading statements on annual financial forms, like overvaluing property values based on their future potential, rather than their current worth.

“However, the [statements of financial condition] are required to state ‘current’ values, not ‘someday, maybe’ values,” the judge wrote.

“Time and time again, the court is not comparing one appraisal to another; it is comparing an independent professional appraisal to a pie-in-the-sky dream of concocted potential.” 

Trump also lied about the size of his personal apartment in Trump Tower, claiming it was approximately three times as big as it actually was. Such a discrepancy “by a real estate developer sizing up his own living space of decades, can only be considered fraud,” the judge found. 

Engoron imposed sanctions in Tuesday's ruling: He canceled New York business certificates for Trump and the other defendants, which include two of his adult children, and gave them 10 days to “recommend the names of no more than three potential independent receivers to manage the dissolution of the canceled LLCs.”

With the ruling in James' favor, the trial set for next month will focus on determining damages for the Trump Organization's fraud.

Trump's attorneys said he plans to appeal the decision immediately.

“Today's outrageous decision is completely unhinged from the facts and governing law," attorney Chris Kise said in a statement to Courthouse News. "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."

"More importantly," Kise continued, "the court disregarded the words of those actually involved in the loan transactions who testified there was nothing misleading and there was no fraud."

Trump has long denied any wrongdoing. On Monday, the former president wrote on his Truth Social platform that he is “worth far more than is shown on my financial statements.” 

“I didn’t even include my most valuable asset, my brand,” he said, adding, “the banks were paid back in full, sometimes early, there were no defaults, the banks made money, were represented by the best law firms, & were very ‘happy.’” 

In a subsequent post, Trump also referenced the financial statements' “disclaimer clause,” which he said “tells anyone reviewing the data, including financial institutions, to do their own research and analysis.” 

His legal team has routinely made the same argument in court, met with pushback from Engoron. During a hearing last Friday, Trump's attorneys claimed that banks may have not even relied on Trump’s personal statements when issuing loans to his company. 

“You cannot make false statements and use them in business,” Engoron said in response, banging his fist on the bench.

Jury selection is slated to begin on Monday, Oct. 2. Trial is expected to run through Dec. 22.

James brought the lawsuit against the former president in September 2022 after a lengthy investigation into the Trump Organization’s finances, which found that Trump regularly inflated his net worth by between $812 million and $2.2 billion annually.

In addition to Trump and his businesses, the suit names his sons, Eric Trump and Donald Trump Jr., and Allen Weisselberg, the Trump Organization's longtime chief financial officer.

Weisselberg, who was sentenced to five months in prison in January after pleading guilty to tax crimes while working for the Trumps, testified against Trump Organization businesses last year in criminal proceedings in New York state court.

Jurors in those proceedings found The Trump Corporation and the Trump Payroll Corporation guilty on all counts in a tax scheme and Judge Juan Merchan ordered the real estate companies to split a $1.6 million fine, the maximum penalty for a corporate entity.

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Categories / Business, Politics, Trials

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