NEW YORK — A judge ruled Tuesday that Donald Trump committed fraud for years while building the real estate empire that catapulted him to fame and the White House.
Former President Donald Trump, his company and key executives repeatedly lied about his worth on his annual financial statements, reaping rewards such as favorable loan terms and lower insurance costs. Artie Walker Jr./Associated Press
Judge Arthur Engoron, ruling in a civil lawsuit brought by New York Attorney General Letitia James, found that the former president and his company deceived banks, insurers and others by massively overvaluing his assets and exaggerating his net worth on paperwork used in making deals and securing financing.
Engoron ordered that some of Trump’s business licenses be rescinded as punishment, making it difficult or impossible for them to do business in New York, and said he would continue to have an independent monitor oversee the Trump Organization’s operations.
Trump’s lawyer, Christopher Kise, said they intend to appeal the decision, calling it a “miscarriage of justice” and “completely disconnected from the facts and governing law.”
“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,” Kise said.
Trump has long insisted he did nothing wrong. His son, Eric, said Engoron’s ruling was “an attempt to destroy my father and kick him out of New York.”
“Today, I lost all faith in the New York legal system,” Eric Trump, a Trump Organization executive and lawsuit defendant, wrote on X, formerly known as Twitter. “Never before have I seen such hatred toward one person by a judge — a coordinated effort with the Attorney General to destroy a man’s life, company and accomplishments.”
Engoron’s decision, days before the start of a non-jury trial in James’ lawsuit, is the strongest repudiation yet of Trump’s carefully coiffed image as a wealthy and shrewd real estate mogul turned political powerhouse.
Beyond mere bragging about his riches, Trump, his company and key executives repeatedly lied about them on his annual financial statements, reaping rewards such as favorable loan terms and lower insurance costs, Engoron found.
Those tactics crossed a line and violated the law, the judge said, rejecting Trump’s contention that a disclaimer on the financial statements absolved him of any wrongdoing.
“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 in his 35-page ruling. “That is a fantasy world, not the real world.”
Manhattan prosecutors had looked into bringing criminal charges over the same conduct but declined to do so, leaving James to sue Trump and seek penalties that aim to disrupt his and his family’s ability to do business in the state.
Engoron’s ruling, in a phase of the case known as summary judgment, resolves the key claim in James’ lawsuit, but several others remain. He’ll decide on those claims and James’ request for $250 million in penalties at a trial starting Oct. 2. Trump’s lawyers have asked an appeals court for a temporary delay.
“Today, a judge ruled in our favor and found that Donald Trump and the Trump Organization engaged in years of financial fraud,” James said in a statement. “We look forward to presenting the rest of our case at trial.”
Trump’s lawyers, in their own summary judgment bid, had asked the judge to throw out the case.
They argued James wasn’t legally allowed to file the lawsuit because there wasn’t any evidence that the public was harmed by Trump’s actions. They also argued that many of the allegations in the lawsuit were barred by the statute of limitations.
Engoron, noting that he had “emphatically rejected” those arguments earlier in the case, equated them to the plot of the film “Groundhog Day.” He fined five defense lawyers $7,500 each as punishment for “engaging in repetitive, frivolous” arguments, but denied James’ request to sanction Trump and other defendants.
James, a Democrat, sued Trump and the Trump Organization a year ago, alleging a pattern of duplicity she dubbed “the art of the steal,” a twist on the title of Trump’s 1987 business memoir “The Art of the Deal.”
The lawsuit accused Trump and his company of routinely inflating the value of assets like skyscrapers, golf courses and his Mar-a-Lago estate in Florida, padding his bottom line by billions.
Engoron found that Trump consistently overvalued Mar-a-Lago, inflating its value on one financial statement by 2,300%. The judge also rebuked Trump for lying about the size of his Manhattan apartment. Trump claimed his three-story Trump Tower penthouse was nearly three times its actual size, valuing it at $327 million.
“A discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud,” Engoron wrote.
On X in the wake of the ruling, Eric Trump insisted his father’s claims about Mar-a-Lago were correct, writing that the Palm Beach estate is “speculated to be worth well over a billion dollars making it arguably the most valuable residential property in the country.”
Trump argued in sworn testimony for the case that the values on his financial statements didn’t matter because the forms have a disclaimer that says they shouldn’t be trusted. Trump argued that banks “made a lot of money” from him and didn’t object to the valuations.
James’ lawsuit is one of several legal headaches for Trump, the Republican front-runner in next year’s election. He has been indicted four times in the last six months — accused in Georgia and Washington, D.C., of plotting to overturn his 2020 election loss, in Florida of hoarding classified documents, and in Manhattan of falsifying business records related to hush money paid on his behalf.
The Trump Organization was convicted of tax fraud last year in an unrelated criminal case for helping executives dodge taxes on perks such as apartments and cars. The company was fined $1.6 million. One executive, Trump’s longtime finance chief Allen Weisselberg, pleaded guilty and served five months in jail. He is also a defendant in James’ lawsuit.
James’ lawsuit does not carry the potential of prison time, but could complicate Trump’s ability to transact real estate deals. It could also stain his legacy as a developer.
James, who campaigned for office as a Trump critic and watchdog, started scrutinizing his business practices in March 2019 after his former personal lawyer Michael Cohen testified to Congress that Trump exaggerated his wealth on financial statements while trying to buy the NFL’s Buffalo Bills.
James’ office previously sued Trump for misusing his charitable foundation to further his political and business interests. Trump was ordered to give $2 million to charity as a fine while his own charity, the Trump Foundation, was shut down.
Associated Press reporters Eric Tucker in Washington, D.C., Jill Colvin in Summerville, South Carolina and Bernard Condon and David B. Caruso in New York contributed to this report.
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