Judge: Donald Trump lied to banks and insurance companies while establishing his real estate empire

Donald Trump was found to have engaged in fraud for years while creating the real estate enterprise that propelled him to prominence and the White House, according to a judge’s ruling on Tuesday.

In a civil case brought by the attorney general of New York, Judge Arthur Engoron determined that the former president and his company defrauded banks, insurers, and other parties by drastically overvaluing their assets and inflating their net worth on documents needed to close deals and obtain funding.

Engoron stated he would continue to have an impartial monitor oversee the Trump Organization’s operations and ordered that some of Trump’s business licences be revoked as a form of punishment, making it difficult or impossible for them to conduct business in New York.

Requests for comment regarding the decision were not immediately answered by a Trump official. Trump has consistently maintained his innocence.

Days before a nonjury trial in Attorney General Letitia James’ lawsuit is scheduled to begin, the judgement is the largest challenge yet to Trump’s carefully cultivated image as a successful and cunning real estate tycoon who has transitioned into a political juggernaut.

Beyond merely boasting about his wealth, Trump, his business, and senior staff frequently lied about it on his annual financial statements, Engoron revealed, benefiting from things like better loan conditions and cheaper insurance rates.

The judge rejected Trump’s argument that a disclaimer on the financial records freed him of any wrongdoing, saying that the techniques went too far and were illegal.

“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,” wrote Engoron in his 35-page decision. That is not the real world; it is a fantasy world.

James sued Trump to seek fines that might hinder his and his family’s ability to conduct business in the state after Manhattan prosecutors considered filing a criminal case over the same conduct but decided against it.

The primary issue in James’ complaint is settled by Engoron’s decision in the summary judgement phase of the case, but there are still six other issues.

Before making a decision about these accusations and any potential penalties, Engoron is scheduled to conduct a non-jury trial beginning on October 2. James is requesting a $250 million fine and a prohibition on Trump conducting business in his home state of New York. According to Engoron, the trial may run into December.

The judge had been requested by Trump’s attorneys to dismiss the lawsuit, but he refused.

They assert that because there is no proof that the public was damaged by Trump’s acts, James was not authorised by law to bring the complaint. They also maintained that the statute of limitations precluded several of the claims made in the complaint.

Engoron compared those arguments to the “time-loop in the movie “Groundhog Day,” noting that he had “emphatically rejected” those arguments previously in the case.

Democrats James and the Trump Organisation were sued last year for alleged deceit, which James labelled “the art of the steal,” a play on Trump’s 1987 business memoir “The Art of the Deal.”

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The lawsuit claimed that Trump and his business habitually exaggerated the worth of their properties, including buildings, golf courses, and their Florida residence Mar-a-Lago, padding their financial standing by billions.

One of the accusations was that Trump exaggerated the size of his three-story penthouse at the Trump Tower in Manhattan, valuing the building at $327 million, whereas in reality it was only slightly larger.

According to James, no flat in New York City has ever sold for that much.

Trump placed a higher value on Mar-a-Lago than more plausible estimates, at $739 million. James added that Trump’s estimate for the private club and mansion was based on the assumption that the land could be developed for residential use, but the deed rules forbid that.

In sworn testimony for the case, Trump asserted that it didn’t matter what he listed on his financial statements since they contain a disclaimer that states they shouldn’t be trusted. Trump has denied wrongdoing. At the deposition in April, he said to James, “You don’t have a case, and you should drop this case.”

“Do you realise the banks were paid in full? Do you realise how profitable the banks were? Trump gave a testimony. “Did you know that even throughout COVID, the banks were all paid, and I don’t think I ever received even a default notice? And yet, I suppose, you are litigating on behalf of banks. It’s absurd. The entire case is absurd.
When the defence initially requested that the case be dismissed, Engoron rejected that justification.

The judge remarked that the financial statements’ disclaimer “makes abundantly clear that Mr. Trump was fully responsible for the information contained within” them and that “allowing blanket disclaimers to insulate liars from liability would completely undercut” the “important function” that such statements serve “in the real world.”

Trump is dealing with a number of legal issues as he runs for re-election to the White House in 2024, including James’ lawsuit. He has been charged with four different crimes in the last six months, including conspiring to rig the 2020 presidential election in Georgia and Washington, D.C., hoarding sensitive data in Florida, and falsifying business records relating to hush money received on his behalf in Manhattan.

The Trump Organisation was found guilty of tax fraud last year in a separate criminal proceeding for aiding executives in evading taxes on lavish benefits like Manhattan apartments and high-end vehicles.

The business received a $1.6 million penalties.

Trump’s longtime financial director Allen Weisselberg, one of the executives, entered a guilty plea and was sentenced to five months in prison. He testified under oath in a deposition in May as a defendant in James’ lawsuit.
James’ case won’t result in any jail time, but it might make it more difficult for Trump to close real estate deals. It can harm his reputation as a developer as well.

Trump and his three eldest children have been petitioned by James to be barred from ever again serving as the CEO of a New York-based corporation. Among other penalties, she wants to prevent Trump and the Trump Organisation for five years from making any purchases of commercial real estate.

According to her, the estimated value of the benefits received from the alleged deception is equal to the $250 million in fines she is requesting.

After Trump’s former personal lawyer Michael Cohen testified before Congress that Trump had exaggerated his wealth on financial statements provided to Deutsche Bank while trying to obtain financing to purchase the NFL’s Buffalo Bills, James, who ran for office as a Trump critic and watchdog, began investigating his business practises.

Trump was previously sued by James’ office for exploiting his own charitable organisation to advance his political and commercial goals. Trump was required to pay a fine of $2 million to a number of organisations, and the Trump Foundation was forced to close.