N.Y. AG Seeks To Ban Trumps From Real Estate In $250M Fraud Suit
After a three-year investigation, New York Attorney General Letitia James has filed a civil fraud lawsuit against former President Donald Trump and his three eldest children, alleging years of illegal behavior.
James is asking the court to ban the Trumps from working in New York real estate for five years.
The suit, filed Wednesday morning in New York State Supreme Court, names Trump, Donald Trump Jr., Ivanka Trump and Eric Trump as defendants, along with Allen Weisselberg, Jeffrey McConney, The Donald J. Trump Revocable Trust, The Trump Organization Inc., and other firms associated with Trump.
She is also seeking restitution of $250M in the civil suit. James said in a press conference Wednesday that she is referring potential criminal activity her office uncovered to U.S. attorneys.
Weisselberg, The Trump Organization’s former chief financial officer, last month pleaded guilty to 15 criminal charges related to fraud he committed while working for the company.
The suit asks the court to permanently ban Trump and his three children from serving as an officer or director at any corporation or similar business entity registered or licensed in New York State. It also seeks to prevent them from entering into any New York commercial real estate acquisition, or from applying for loans from any financial institution in New York for five years.
James said during the press conference that her office had uncovered 200 examples of the Trumps fraudulently misvaluing assets in order to score better loans from banks and to avoid paying taxes.
The complaint filed runs 280 pages long, and James said her office’s investigation included some 65 witnesses. The alleged frauds took place over at least the years from 2011 through 2021, the complaint states.
"White collar financial crime is not a victimless crime. When the well connected break the law to take in more money than they are entitled to, it reduces resources to working people, to regular people, to small businesses and to all taxpayers," James said.
"Everyday people cannot lie to a bank about how much money they have in order to get a favorable loan to buy a home or to send their kid to college. And if they did, the government would throw the book at them. Why should this be any different?"
She described the fraud and deception employed by the Trumps as "astounding."
James found that appraisers valued Trump’s Financial District skyscraper, 40 Wall St., at $200M in August 2010 and $220M in 2012. But on Trump’s 2011 financial statement, he pegged the value of 40 Wall at $524M, then going up to $530M in the next two years, more than double the professional calculation, the AG’s office claims.
At Mar-A-Lago, the Palm Beach country club where Trump moved full time after leaving the White House, James claimed the former president once valued it as high as $739M as an unrestricted plot of land, despite its historic designation that would force him to pay 23% of the property value to the Trust for Historic Preservation if it were to be sold.
“The club generated annual revenues of less than $25M and should have been valued at about $75M,” James said.
She further claims that Trump lied and said his famed triplex at Trump Tower on Fifth Avenue spans 30K SF, while it is in reality only 11K SF. She said he was well aware of the discrepancy, but in 2015 and 2016 stated the value of the apartment was $327M. The most expensive apartment to ever sell in New York City is said to be a penthouse at 220 Central Park South, which Citadel’s Ken Griffin bought in 2019 for about $238M. The lawsuit notes that at a 30-year-old building, the highest sale as of 2015 was just $16.5M.
“Mr. Weisselberg conceded that using the false square footage improperly inflated the value of the apartment almost threefold,” James said at the press conference. “Mr. Weisselberg admitted that this amount is an overstatement of give or take $200M.”
At Trump Park Avenue, the luxury apartment building at 502 Park Ave. that Trump converted into 120 condominiums and eight penthouses, James said Trump had been told that 12 of the apartments were rent-stabilized, and an appraiser pegged their value at $750K. Despite knowing their legal restrictions, he put their value in a financial statement at $49M.
The inflated valuations were used to falsely plump up Trump's net worth, James said, which he then used to obtain real estate loans by personally guaranteeing them. In one instance, he cited his net worth in guaranteeing a loan from Deutsche Bank of $170M for the revamp of the Old Post Office in Washington, D.C., into the Trump International Hotel.
The hotel was not only the lobbying hub of Trump's presidency, it was the subject of numerous lawsuits accusing him of illegally profiting from foreign governments while holding office. The company sold its lease on the building for $375M in May, which James said means the Trumps were able to make a $100M profit based on lies about the former president's financial position.
Trump last month sat for a deposition in the case but exercised his Fifth Amendment rights, reportedly more than 500 times, during questioning.
Cushman & Wakefield, which served as the appraiser for the properties at the heart of the AG's investigation, turned over roughly 36,000 documents to the attorney general’s office as part of the investigation, after being briefly held in contempt for failing to provide them. James' office reportedly rejected a proposed civil settlement from Trump's lawyers last week.
Along with the ban on real estate and business activities on Trump, James is seeking the appointment of an independent monitor to oversee the Trump Organization's compliance, financial reporting, valuations and disclosures to lenders, insurers and governmental authorities for at least five years.
Mazars USA, Trump’s long-serving accountant, said in February the financial statements it prepared for the Trump Organization shouldn't be relied upon, telling the firm by letter to retract its statements of financial condition filed between 2011 and 2020.
The Trump Organization is facing a tax fraud trial, set for Oct. 24, following a parallel criminal investigation.
"Claiming you have money that you do not have does not amount to the art of the deal," James said. "It's the art of the steal."
