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NY attorney general brings long-awaited financial fraud suit against Donald Trump

The civil lawsuit against Donald Trump focuses on a decade of financial statements in which the former president and his namesake business falsely inflated his net worth by billions of dollars for more favorable loan terms.

MANHATTAN (CN) — The New York attorney general’s office announced Wednesday a $250 million civil complaint against Donald Trump arising from its yearslong investigation into the misleading financial practices of the former president’s real estate empire.

"For too long, powerful, wealthy people in this country have operated as if the rules do not apply to them,” New York Attorney General Letitia James announced at a press conference at her lower Manhattan office Wednesday morning. "Donald Trump stands out as among the most egregious examples of this misconduct."

"With the help of his children and senior executives at the Trump Organization, Donald Trump falsely inflated his net worth by billions of dollars to unjustly enrich himself and cheat the system," James' statement reads.

Trump’s three eldest children, Donald Jr., Ivanka and Eric Trump, were also named as defendants, along with two longtime company executives, Allen Weisselberg and Jeffrey McConney.

Filed in New York state supreme court, the seven-count civil complaint, charges Trump and his co-defendants with “persistent and repeated fraud,” insurance fraud, falsifying business records and related conspiracy counts.

Among the remedies sought in the complaint, James wants to permanently bar Donald 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; and to bar Trump and the Trump Organization from entering into any New York real estate acquisitions for five years.

The complaint also seeks disgorgement of all financial benefits obtained through the persistent fraudulent practices, estimated to total $250 million.

“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 at the conclusion of her press conference, riffing on Trump’s 1987 book “The Art of the Deal.”

"There cannot be different rules for different people in this country or in this state,” she added.

Asked how long she expects the case to play out for, James replied, "that’s entirely up to the judge."

Trump condemned the lawsuit on Wednesday afternoon as "Another Witch Hunt by a racist Attorney General."

During the press conference, James said her office was seeking to dissolve Trump's company, but later clarified during the Q&A portion that dissolution of the Trump Organization is not among the relief sought in the complaint.

James' announcement on Wednesday morning was delivered from her 16th floor office in Lower Manhattan, directly across a plaza from Trump’s 40 Wall Street building, one of the properties named in the civil complaint for bogus valuations inflated by hundreds of millions of dollars.

“For example, they received a series of bank-ordered appraisals for the commercial property at 40 Wall Street that calculated a value for the property at $200 million as of August 1, 2010 and $220 million as of November 1, 2012," the complaint states. "Yet in the 2011 statement, they listed 40 Wall Street with a value $524 million and increased the valuation to $527 million in the 2012 statement, and to $530 million in 2013 — more than twice the value calculated by the 'professionals.' Even more egregiously the valuation of more than $500 million was attributed to information obtained from the same professional appraiser who prepared both valuations putting the building’s value at or just over $200 million."

Donald Trump Jr. — who oversees the Trump Organization’s property portfolio and is involved in all aspects of the company’s property development, and is responsible for all of the commercial leasing for the Trump Organization which includes Trump Tower and 40 Wall Street — denounced the attorney general on Twitter as "a Dem activist, who only cares about politics" who is "weaponizing her office to go after her political opponents."


Additionally, the complaint seeks the appointment of an independent monitor to oversee compliance, financial reporting, valuations, and disclosures to lenders, insurers, and tax authorities at the Trump Organization for a period of no less than five years, and to permanently bar Weisselberg and McConney, both Trump Organization executives, from serving in the financial control function of any New York corporation or similar business entity registered and/or licensed in New York state.

In conjunction with the state's investigation, James' office has referred the matter to the U.S. Attorney's Office for the Southern District of New York and the Internal Revenue Service for criminal investigation. A footnote in the complaint indicates that the conduct alleged in this action also plausibly violates federal criminal law, including 18 U.S.C. § 1014 (False Statements to Financial Institutions) and 18 U.S.C. § 1344 (Bank Fraud).

"Under those provisions, a defendant violates federal law by knowingly submitting a false document or statement in order to influence the decision of a federally-insured bank or to obtain money from a bank by means of false representations or pretenses," the footnote states.

Nicholas Biase, a chief spokesman for the Southern District of New York confirmed that the federal prosecutors "are aware of the New York Attorney General’s referral," but declined to comment further.

Manhattan District Attorney Alvin Bragg confirmed Wednesday that his office's criminal investigation "concerning former President Donald J. Trump, the Trump Organization, and its leadership is active and ongoing.”

The state's civil investigation probed evidence of manipulative bookkeeping at over half a dozen of Trump's properties, including Seven Springs, Trump Tower Triplex, Trump International Golf Club Scotland, The Trump Brand, Trump National Golf Club Westchester, Trump Park Avenue and 40 Wall Street, according to earlier court filings related to the New York attorney general’s subpoena requests.

James reportedly rejected bids by Trump’s lawyers to settle the investigation before her office brought a lawsuit, the New York Times reported last week.

The former president's personal attorney Alina Habba immediately rebuffed the complaint as “meritless” and “solely focused on advancing the Attorney General’s political agenda.”

“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. It is abundantly clear that the Attorney General’s Office has exceeded its statutory authority by prying into transactions where absolutely no wrongdoing has taken place,” Habba wrote in a statement Wednesday.

A spokesperson for the Trump Organization on Wednesday called James’ probe “an abhorrent abuse of power, waste of valuable resources and tens of millions of taxpayer dollars,” and said the civil case “represents the culmination of nearly three years of persistent, targeted, unethical political harassment by the New York State Attorney General.”

Trump’s chief spokeswoman Liz Harrington wrote on Trump’s Truth Social website, “These people are DERANGED! President Trump did not inflate his assets, he UNDERVALUED them.”

“Letitia James is down in the polls and is a really bad actress,” she exclaimed on the social media site, invoking Trump’s signature bluster in response to the lawsuit.

After a protracted battle in New York state court resisting James’ evidence gathering, New York County Supreme Court Judge Arthur Engoron in February ordered Trump to sit for a deposition as part of the New York attorney general’s civil investigation into his business dealings.

Last month, Trump arrived at James' offices in a motorcade shortly before 9 a.m., before announcing more than an hour later that he "declined to answer the questions under the rights and privileges afforded to every citizen under the United States Constitution.”

“I once asked, ‘If you’re innocent, why are you taking the Fifth Amendment?' Now I know the answer to that question,” Trump’s statement said. “When your family, your company, and all the people in your orbit have become the targets of an unfounded politically motivated Witch Hunt supported by lawyers, prosecutors and the Fake News Media, you have no choice.”

In April, Engoron held the former president in contempt for being slow to respond to a civil subpoena issued by New York’s attorney general, and ultimately order Trump to $110,000 in fines he racked up as a result of the contempt finding.

James’ predecessor Barbara Underwood brought a civil suit against Trump’s charitable foundation in June 2018, alleging he used money from his charitable foundation for his personal, business and political interests during the 2016 presidential election campaign, which led to a $2 million settlement and the dissolution of the Trump Foundation six months after the state’s civil suit was filed.

Last summer, spurred by evidence uncovered in James' civil investigation, the Manhattan district attorney's office charged Weisselberg and the Trump Organization with tax fraud, alleging he collected more than $1.7 million in off-the-books compensation. 

Set to go to trial in October 2022, Weisselberg pleaded guilty to all 15 counts of the state’s criminal indictment last month and agreed to testify at the upcoming Trump Organization trial.

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