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Thursday, February 29, 2024
Courthouse News Service
Thursday, February 29, 2024 | Back issues
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New York AG will secure fiscal watchdog for Trump Org

Approval for the move comes after the former president put the pieces in play to transfer assets out of state.

MANHATTAN (CN) — A judge gave New York’s top prosecutor the green light Thursday to have an independent watchdog oversee the Trump Organization’s finances pending the outcome of a $250 million civil suit over fraudulent business practices.

In the motion for preliminary injunction last month, New York Attorney General Letitia James noted that the Trump Organization had suspiciously filed paperwork on Sept. 21 — the same day that James brought her long-awaited civil lawsuit — to register a new company in New York named Trump Organization II but incorporated in Delaware. James called it an attempt to evade accountability.

“Given ‘the large sums of money involved’ in OAG’s request for disgorgement, First Investors Corp., 156 Misc. 2d at 220, and the very recent creation of ‘Trump Organization II LLC’ the Court should enjoin the Trump Organization from transferring assets to any non-party affiliates or disposing of any assets without review by the monitor and approval by the Court during the pendency of this action to maintain the status quo,” she urged the court.

Manhattan Supreme Court Judge Arthur Engoron granted the motion Thursday afternoon, three hours after holding in-person oral arguments.

“Defendants are hereby preliminary enjoined from selling, transferring, or otherwise disposing of any non-cash asset listed on the 2021 Statement of Financial Condition without first providing 14 days written notice to OAG and this court; and this court will appoint an independent monitor, to be paid by defendants, for the purpose of ensuring compliance with this order,” the order states.

Finding a likelihood of success on the merits for the attorney general, Judge Engoron said former President Donald Trump and his three adult children who are parties to the civil case must notify the monitor at least 30 days in advance regarding “any planned or anticipated restructuring of the Trump Organization, its subsidiaries, and all other affiliates, or of any plans for disposing or refinancing of significant Trump Organization assets, or disposing significant liquidity.”

James applauded the judge’s ruling this afternoon.

“Time and time again, the courts have ruled that Donald Trump cannot evade the law for personal gain,” she said in a statement. “Today’s decision will ensure that Donald Trump and his companies cannot continue the extensive fraud that we uncovered and will require the appointment of an independent monitor to oversee compliance at the Trump Organization. No number of lawsuits, delay tactics, or threats will stop our pursuit of justice.”

A week ahead of oral arguments on the matter, Trump berated Judge Engoron on social media as "a vicious, biased, and mean 'rubber stamp' for the Communist takeover of” his namesake real estate company.

Judge Engoron previously held Trump in contempt over compliance with document subpoenas and ordered him to testify in the attorney general’s probe.

A Trump Organization spokesperson slammed Thursday's ruling meanwhile as hasty and politicized. 

“This is just more political persecution by Letitia James, who is up for re-election in 5 days and reportedly trailing in the polls," they wrote Thursday afternoon. "Indeed, it should come as no surprise that, rather than take the time to review the filings and make a reasoned decision, the Court issued a snap opinion a mere 3 hours after arguments were heard — and just hours before AG James is scheduled to attend a rally alongside Hillary Clinton and Kamala Harris."

Engoron spoke about the evidence at Thursday’s hearing, noting that an outside appraiser had given one Trump-owned building a valuation of $750,000 because it was made up of the rent-controlled units. On a statement of financial condition, however, Trump reported the same building with a valuation of $50 million. “Is that a good faith disagreement,” the judge asked. “There’s evidence an outside appraiser said $750,000 ... and they said $50 million, how do you explain that?”

Toward the end of Thursday’s hearing, Judge Engoron posited that “the 800-pound gorilla in this case” boiled down to determining “when does a reasonable disagreement become a fraud?”

Injecting some humor into the hearing, as he is wont to do, Judge Engoron also joked about considering nominating Judge Raymond Dearie as the monitor.

Dearie, a former chief federal judge for the Eastern District of New York who is semiretired with senior status at the Brooklyn federal court, is already serving as court-appointed special master in the Mar-a-Lago documents case following Trump’s motion for judicial oversight. U.S. District Judge Aileen Cannon is presiding over that case in the Southern District of Florida.

The Trump Organization was represented on Thursday by Christopher M. Kise, a former Florida solicitor general, who challenged the attorney general’s case as "tantamount to nationalization” and lacking any public interest.

Trump’s personal attorney Alina Habba attended Thursday’s hearing but did not speak at the hearing.

The Office of the New York Attorney General was represented on Thursday by attorney Kevin Wallace, who noted Trump Organization “has a persistent record of consistently not complying with existing orders.”

Wallace warned Judge Engoron during the hearing that, if there was any harm to the Trump Organization following the appointment of a monitor, it would be a result of a more accurate reflection of the company’s financial condition and not from the injunctive relief itself.

The state attorney general's civil lawsuit accuses former President Trump of having falsely inflated his net worth by billions of dollars to induce banks to lend money to the Trump Organization on more favorable terms than would otherwise have been available to the company and to gain tax benefits.

On Wednesday evening, Trump filed a lawsuit that seeks to block James from accessing the records of the Donald J. Trump Revocable Trust, which holds ownership of the Trump Organization.

Trump announced the lawsuit in Florida’s 15th Judicial Circuit Court on his Truth Social account, repeating his claim that he is the target of a political witch hunt. “Crooked and highly partisan James now thinks it is the business of the State of New York to go after my revocable trust and pry into my private estate plan, only to look for ways to recklessly injure me, my family, my businesses, and my tens of millions of supporters," Trump wrote.

According to the lawsuit in Palm Beach County, the trust contains Trump’s private estate plan and present decisions regarding the disposition of his assets upon death. “These are private matters to President Trump, and under Florida law, revelation of a settlor’s revocable trust while the settlor is still alive threatens the settlor’s right to privacy guaranteed by Article I, Section 23 of the Florida Constitution and the common law," the filing states.

Trump previously, and unsuccessfully, sued in New York state court to shut down James’ investigation.

At the concluding of Thursday’s hearing, Judge Engoron had affirmed from the bench that he does not intend to let the case stall. “I want this case to move forward as fast possible," he said.

A schedule proposed by the New York attorney general would set a trial date in the case for Oct. 2, 2023.

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Categories / Business, Financial, Government

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