New York Attorney General Letitia James announced that she had filed a lawsuit against former president Donald Trump, his three adult children, his business associates and a series of his companies on Wednesday.
The lawsuit alleges that Mr Trump artificially inflated the value of multiple business entities and hopes to bar Mr Trump and his children Donald Trump Jr, Ivanka Trump and Eric Trump from serving as a director of a corporation or similar entity; bar him and the organization from entering any New York real estate acquisitions for the next five years; and seeks $250m from all financial benefits obtained from fraud.
In addition, they come as the former president weighs another run for president in 2024 after he lost to President Joe Biden in 2020. After the FBI executed a search warrant at Mar-a-Lago last month, one poll showed that he bolted even further ahead of other potential Republican challengers in a primary.
Similarly, the former president’s supporters have shown little sign of abandoning him, and it’s unlikely the latest lawsuit will push his followers away.
At his first rally after the FBI retrieved documents from his Palm Beach home, he received a thunderous applause in Wilkes-Barre, Pennsylvania. At a rally this last weekend in Ohio, many of his supporters also joined him in a bizarre one-finger salute. The former president will go to Wilmington, North Carolina this Friday to campaign with his preferred candidates and it will likely become an event to show solidarity with him.
Some of these allegations were already made public in January, such as the former president asserting that his apartment was 30,000 feet in size when in truth it was 10,996 square feet, and the fact that the Trump Organization never collected golf club initiation fees.
But the extent and the detail of Mr Trump’s actions, with the assistance of Trump Organization chief financial officer Allen Weisselberg, were not known until now.
Here are five major takeaways from the New York Attorney General’s lawsuit against the former president.
Falsifying financial statements
The lawsuit alleges that Mr Trump and his organisation made a series of fraudulent financial statements.
“Indeed, Mr. Trump made known through Mr. Weisselberg that he wanted his net worth on the Statements to increase—a desire Mr. Weisselberg and others carried out year after year in their fraudulent preparation of the Statements,” the lawsuit said.
“Mr. Trump and the Trump Organization used these false and misleading Statements repeatedly and persistently to induce banks to lend money to the Trump Organization on more favorable terms than would otherwise have been available to the company, to satisfy continuing loan covenants, and to induce insurers to provide insurance coverage for higher limits and at lower premiums.”
The attorney general’s office alleges that Mr Trump, his children, his organisation and other defendants made more than 200 false and misleading valuations between 2011 and 2021. Similarly, despite saying they received help from outside professionals, to the extent there were any, they were routinely ignored.
Some ways that Mr Trump inflated the value of his assets included the aforementioned golf club initiation fees and size of his apartment.
Falsifying the value of his properties
The lawsuit lays out multiple allegations of how the Trump Organization relied on “objectively false numbers” to calculate the value of properties.
The Trump Park Avenue building was included as an asset on Mr Trump’s statement of financial condition from 2011 to 2021 with values between $90.9m and $350m, with unsold condominium units accounting for up to 95 per cent of reported value in some years.
“Reported values of the unsold residential units of the Trump Park Avenue building were significantly higher than the internal valuations used by the Trump Organization for business planning and failed to account for the fact that many units were rent stabilized,” the lawsuit said. But the Trump Organization also marketed rent-stabilised apartments at his property on Park Avenue as not stabilised.
“Indeed, Donald Trump, Jr. testified that the rent-stabilized tenants at the building were, “the bane of [his] existence for quite some time,” the lawsuit alleges. In 2010, a bank-ordered appraisal valued the 12 rent-stabilized apartments for a total of $750,000, but in 2011 and 2012 statements, the rent-stabilized apartments were valued at a market rate of $50m total.
Lying about his wealth
In addition to the values of his properties, the lawsuit also alleges Mr Trump lied about his own wealth, specifically his holdings in cash, cash equivalents or marketable securities. Case in point, Mr Trump reportedly included his minority stake in Vornado Partnership Interests – which he did not control – in his holdings of cash.
“In some years these restricted funds accounted for almost one-third of all the cash reported by Mr. Trump,” the lawsuit says. Internal records reportedly acknowledge that the cash residing in Vornado was not Mr Trump’s to access at will.
“The decision to include cash in the Vornado Partnership Interests, as if it were Mr. Trump’s own cash as reflected in the Statements and contrary to GAAP, was made by Mr. McConney and/or Mr. Weisselberg and was approved by Mr. Trump or his attorney-in-fact Donald Trump Jr,” the lawsuit said.
Similarly, in 2014, Mr Trump made a $1bn bid to purchase the Buffalo Bills, the NFL team, and up to $880m of that bid could have been financed.
“As part of that bid, DJT and the Trump Organization needed a confidence letter from a financial institution to submit with his bid package. Mr. Trump asked Deutsche Bank (through Rosemary Vrablic) for that letter,” the lawsuit said. Mr Trump’s bid package included a letter signed by Ms Vrablic that indicated he would have the “financial wherewithal” to purchase the team.
“Although Mr. Trump’s 2013 Statement of Financial Condition (inflated pursuant to the deceptive strategies described above) reported a net worth of approximately $5.1 billion, Mr. Trump sent a separate letter, under his own signature, using an even higher figure in an effort to win the bidding: ‘I have a net worth in excess of Eight Billion Dollars (financial statements to be provided upon request),’” the lawsuit said.
Financial statements used to obtain favourable loans
Ms James emphasised that “white collar crimes are not victimless crimes” as she laid out the case against Mr Trump at her press conference. The lawsuit says that the false statements allowed him to receive loans on favourable terms.
“Mr. Trump and his operating companies obtained additional benefits from banks other than loan proceeds in the form of favorable interest rates that likely saved them more than $150 million over the prior ten-year period,” the lawsuit said.
In the case of Trump National Doral, the organisation executed a $150m purchase and sale agreement for the property and the false statements allowed him to secure a $125m loan from Deutsche Bank to fulfill financial reporting requirements of Mr Trump as the loan’s guarantor.
“In multiple instances, the loan agreement required that Mr. Trump certify the truth and accuracy of his statements as a condition of the guaranty and the continuing loan covenants,” a statement from the attorney general’s office said.
Similarly, in 2009, Trump International Hotel & Tower in Chicago’s property value was excluded from statements, ostensibly because Mr Trump did not want to take a position that would conflict with his contention to tax authorities that the property had become worthless, which would allow him to claim a loss under federal tax law. But in 2012, Mr Trump received a $107m loan on the building from Deutsche Bank after he used the building or its components as collateral.
Trump’s children were intimately involved
All three of Mr Trump’s eldest children – Donald Trump Jr, Ivanka Trump and Eric Trump – are implicated and named as defendants in the lawsuit.
“As Executive Vice Presidents, the three children were intimately involved in the operation of the Trump Organization’s business,” the lawsuit said. “They were aware of the true financial performance of the company, whether through Donald Trump Jr.’s work on commercial leasing, Ivanka Trump’s work on Doral, Trump Chicago and OPO, or Eric Trump’s work on the golf course portfolio.”
The lawsuit said that Ms Trump, who worked in her father’s administration, directed the company’s hotel and management platforms.
“This included active participation in all aspects of projects, including deal evaluation, pre-development planning, financing, design, construction, sales and marketing, as well as involvement in all decisions relating to those activities—large and small,” the lawsuit alleges.
In addition, it notes how Eric Trump, who notably invoked the Fifth Amendment 500 times during the probe, “is responsible for all aspects of management and operation of the Trump Organization including new project acquisition, development and construction” and was aware of his father’s stake with Vornado. It also noted that Donald Trump Jr also had an active role in the company.
