Court Rules Donald Trump Guilty of Fraudulent Business Dealings

A New York Supreme Court judge ruled on Tuesday that former President Donald Trump had engaged in fraudulent activities over several years while building his real estate empire, actions that played a role in his rise to fame and the presidency. This ruling came as part of a civil lawsuit initiated by New York’s attorney general, Letitia James.

Judge Arthur F. Engoron found that Trump and his company had deceived banks, insurers, and others by significantly inflating the value of his assets and exaggerating his net worth on various documents used for business deals and securing financing. In response to this judgment, Engoron ordered the revocation of certain business licenses held by Trump, which could have the effect of making it challenging or impossible for his enterprises to operate in New York. Additionally, an independent monitor was appointed to oversee the Trump Organization’s operations.

This ruling, which arrived just days before the commencement of a non-jury trial in Attorney General James’ lawsuit, represents a significant setback to Trump’s carefully cultivated image as a wealthy and astute real estate magnate who later transitioned into the realm of politics. Beyond mere boasting about his wealth, Trump and key executives within his company were found to have repeatedly fabricated information in their annual financial statements, resulting in advantageous loan terms and reduced insurance premiums, as determined by Judge Engoron.

The judge firmly rejected Trump’s argument that a disclaimer on the financial statements should absolve him of any wrongdoing, emphasizing that such tactics crossed the boundaries of the law. He stated that in the defendants’ perspective, rent-regulated apartments held equivalent value to unregulated ones, restricted land was as valuable as unrestricted land, and restrictions could simply vanish. Engoron described this viewpoint as fantastical and detached from reality.

The Manhattan prosecutors had previously contemplated pursuing a criminal case related to these actions but ultimately opted not to, leaving Attorney General James to file a civil suit against Trump. The lawsuit sought penalties that could disrupt Trump’s family’s ability to conduct business in the state of New York.

While Engoron’s ruling pertains to the key claim in James’ lawsuit, there remain six additional claims to be adjudicated. A non-jury trial, scheduled to commence on October 2, will address these remaining claims and potential penalties. James is seeking penalties totaling $250 million and a prohibition on Trump engaging in business activities in New York. This trial could extend into December.

Trump’s legal team had previously sought to have the case dismissed, arguing that James lacked the legal standing to initiate the lawsuit, as there was no evidence that the public had been harmed by Trump’s actions. They also contended that many of the claims were barred by the statute of limitations. Judge Engoron firmly rejected these arguments, likening them to a recurring time loop akin to the film “Groundhog Day.”

James filed the lawsuit against Trump and the Trump Organization a year ago, alleging a consistent pattern of deception, a theme that James has dubbed “the art of the steal,” a play on the title of Trump’s 1987 business memoir, “The Art of the Deal.”

The lawsuit accuses Trump and his company of routinely inflating the value of assets such as skyscrapers, golf courses, and his Mar-a-Lago estate in Florida, thereby artificially inflating his financial standing by billions of dollars. Among the specific claims is that Trump misrepresented the size and value of his Trump Tower apartment in Manhattan and grossly exaggerated the worth of Mar-a-Lago, an evaluation more than ten times higher than a reasonable estimate.

Trump has consistently denied any wrongdoing, asserting during sworn testimony that the content of his financial statements was inconsequential, given the presence of a disclaimer indicating that they should not be relied upon. He even suggested that James should drop the case, emphasizing that banks had been fully compensated and that they had profited from his dealings, even during the COVID-19 pandemic.

Engoron rejected this argument, emphasizing that the disclaimer on the financial statements unambiguously indicated Trump’s full responsibility for the information they contained. He further noted that allowing such blanket disclaimers to protect liars from accountability would fundamentally undermine the crucial role these statements play in the real world.

The lawsuit represents one of several legal challenges for Trump as he explores the possibility of a return to the White House in 2024. In recent months, he has faced indictments related to alleged efforts to overturn the 2020 election results, hoarding classified documents, and falsifying business records tied to hush money payments. Additionally, the Trump Organization faced a conviction for tax fraud last year in a separate criminal case, which resulted in a $1.6 million fine. One of the company’s top executives, Allen Weisselberg, pleaded guilty and served a five-month jail sentence. Weisselberg is a defendant in Attorney General James’ lawsuit and provided sworn deposition testimony for the case in May.

Although James’ lawsuit does not carry the potential for imprisonment, it could complicate Trump’s ability to engage in real estate transactions and tarnish his legacy as a developer. The Attorney General has requested that Engoron ban Trump and his three eldest children from ever again operating a New York-based company and prevent the Trump Organization from participating in commercial real estate acquisitions for five years, among other penalties. The $250 million in penalties James is seeking reflects her estimation of the benefits derived from the alleged fraud.

James began investigating Trump’s business practices in March 2019, following testimony from his former personal lawyer, Michael Cohen, who asserted that Trump had exaggerated his wealth on financial statements submitted to Deutsche Bank in pursuit of financing to purchase the NFL’s Buffalo Bills. Previously, James’ office had sued Trump for the improper use of his charitable foundation for political and business purposes. In that case, Trump was ordered to pay $2 million to various charities as a penalty, and the Trump Foundation was permanently closed.

Image credits; miro.medium