Donald Trump and his family business are set to stand trial in New York on Monday in a civil fraud case that could deal a major blow to the former U.S. president’s real estate empire.
Trump, a candidate for the Republican presidential nomination, is accused by New York Attorney General Letitia James of inflating the value of his assets by billions of dollars to secure better loan and insurance terms.
James is seeking at least $250 million US in fines, a permanent ban against Trump and his sons Donald Jr. and Eric from running businesses in New York and a five-year restriction on commercial real estate activities by Trump and his flagship Trump Organization.
James alleges Trump reaped hundreds of millions of dollars in ill-gotten savings by “grossly” inflating the values of his assets to get better deals from lenders and insurers. That included listing his Mar-a-Lago club and residence in Florida as being worth up to $739 million even though deed restrictions capped it at $28 million, James said.
‘Fantasy world’
Trump plans to attend the first week of trial in state court in Manhattan, according to a court filing in an unrelated case.
He has called the charges politically motivated, and has at times said the practices his company engaged in with respect to valuations were typical for large real estate firms.
Justice Arthur Engoron, who is presiding without a jury, disagreed. In a scathing decision on Sept. 26, Engoron found the defendants liable for fraud, and criticized a number of defendant practices with respect to financial statements as “fantasy world, not the real world.”
Trump at one point suggested under oath in his deposition that the valuations were fine because he could find a “buyer from Saudi Arabia” to pay whatever he wanted.
“This statement may suggest influence-buying more than savvy investing,” Engoron wrote.
Engoron cancelled business certificates for companies controlling pillars of Trump’s empire — including Trump Tower and his golf clubs in New York — and said he would appoint receivers to oversee their dissolution.
The ruling covers only a handful of the roughly 500 entities in Trump’s portfolio but includes some of his most valuable properties.
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The specifics of how that order will be implemented have not been decided, but the loss of those prized assets would be a major blow to Trump’s finances. If Engoron tacks on fines and business restrictions, that damage would compound.
Trump will appeal that ruling but in the meantime the trial will see Engoron decide on six remaining claims in James’s lawsuit, including allegations of conspiracy, falsifying business records and insurance fraud.
Weekslong trial likely
The trial is scheduled to run through early December. More than 150 people including Trump are listed as potential witnesses, but much of the trial will likely be a battle of experts opining on financial documents.
Among them are former Trump lawyer Michael Cohen, who highlighted the variableness of Trump Organization valuations in congressional testimony in early 2019.
“It was my experience that Mr. Trump inflated his total assets when it served his purposes, such as trying to be listed amongst the wealthiest people in Forbes, and deflated his assets to reduce his real estate taxes,” Cohen told the House committee.
The civil trial is not related to the four criminal indictments Trump is confronting in as many jurisdictions. He faces 91 criminal counts overall, accused of unlawful retention of government documents, falsifying business records in order to cover up hush money payments and for attempts to prevent his election defeat in 2020.
The earliest criminal trial date Trump faces is scheduled for March 2024, at the height of the Republican presidential primary campaign.