New York Sues Donald Trump, Company and Family Members Over Widespread Fraud Claims, Seeks at Least $250 Million in Penalties

Andrew Kelly | Reuters
  • New York Attorney General Letitia James on Wednesday sued former President Donald Trump, the Trump Organization, three of his adult children and others for allegedly widespread fraud involving false financial statements related to the company.
  • The lawsuit seeks at least $250 million in damages.
  • "Mr. Trump's Statements of Financial Condition for the period 2011 through 2021 were fraudulent and misleading in both their composition and presentation," the complaint says.

New York Attorney General Letitia James on Wednesday sued former President Donald Trump, the Trump Organization, three of his adult children and others for allegedly widespread fraud involving years' worth of false financial statements related to the company's business.

The 220-page civil lawsuit filed in Manhattan Supreme Court seeks at least $250 million in damages.

It also seeks to permanently bar Trump, Donald Trump Jr., Eric Trump and Ivanka Trump from serving as an officer of a company in New York, and permanently prohibit the Trump companies named in the suit from doing business in New York state.

James said she has asked federal prosecutors in Manhattan and the IRS to investigate Trump for possible federal crimes. She said that evidence obtained during her three-year civil probe of Trump indicated possible crimes of bank fraud and making false statements to financial institutions.

James said Trump massively overstated the values of his assets in statements to banks, insurance companies and the IRS to obtain more favorable loan and insurance terms for his company, as well as to lower its tax obligations.

"Trump falsely inflated his net worth by billions of dollars," James said at a news conference, where she announced she will seek to bar Trump and his company from acquiring any New York real estate for five years, and bar them from applying for loans from banks charted in the state for the same period of time.

"For too long, powerful, wealthy people in this country have operated as if the rules do not apply to them," she said in a statement. "Donald Trump stands out as among the most egregious examples of this misconduct. With the help of his children and senior executives at the Trump Organization, Donald Trump falsely inflated his net worth by billions of dollars to unjustly enrich himself and cheat the system."

The suit alleges that "the number of grossly inflated asset values is staggering, affecting most if not all of the real estate holdings in any given year."

"All told, Mr. Trump, the Trump Organization, and the other Defendants, as part of a repeated pattern and common scheme, derived more than 200 false and misleading valuations of assets included in the 11 Statements covering 2011 through 2021," the complaint says.

The suit says that Trump's personal financial statements "for the period 2011 through 2021 were fraudulent and misleading in both their composition and presentation."

James said that Trump had falsely claimed that his apartment in Manhattan was more than triple its actual size as part of the alleged fraud.

And the suit says Trump valued his Mar-a-Lago club property in Palm Beach, Florida, on the false premise that it sat on unrestricted property and could be developed for residential use, even though he allegedly knew that asset was subject to a slew of tight restrictions.

Mar-a-Lago "generated less than $25 million in annual revenue," James said. "It should have been valued at about $75 million, but it was valued at $739 million."

The suit says that despite claims to the contrary by the Trump Organization to third parties, no professionals outside the company were retained to prepare statements of Trump's financial condition. Those statements included claims about the value of various real estate assets that were used to obtain loans and insurance coverage.

"To the extent Mr. Trump and the Trump Organization received any advice from outside professionals that had any bearing on how to approach valuing the assets, they routinely ignored or contradicted such advice," the suit said.

James pointed to a Manhattan property listed in the lawsuit, 40 Wall St., as an example of that.

She said that the Trump Organization and Trump received appraisals from a bank calculating the value of that property at $200 million as of Aug. 1, 2010, and $220 million as of November 1, 2012.

But in Trump's 2011 Statement of Financial Condition, 40 Wall St. was listed as having a value of $524 million. That valuation then increased to $527 million in Trump's 2012 statement and to $530 million in the 2013 statement, or "more than twice the value calculated by the 'professionals,'" the suit said

In addition to the Trumps, the defendants in the suit include Allen Weisselberg, who acted for years as chief financial officer of the Trump Organization.

Both Weisselberg and the Trump Organization were criminally charged last year by the Manhattan district attorney's office for an alleged scheme to avoid paying taxes on portions of the compensation given to company executives, among them Weisselberg.

Other defendants in the suit include Weisselberg's lieutenant, Jeffrey McConney, as well as several Trump companies, among them ones that own properties in Manhattan, Westchester County, New York, Washington, D.C., and Chicago.

The seven-count suit alleges persistent and repeated fraud; falsifying business records; conspiracy to falsify business records; issuing false financial statements; conspiracy to falsify false financial statements; insurance fraud; and conspiracy to commit insurance fraud.

A spokesman for the Manhattan U.S. attorney's office declined to comment on James' criminal referral about Trump to that office.

Trump for years has blasted James for investigating his business, saying the Democratic attorney general was motivated by political animus against a Republican former president.

"Another Witch Hunt by a racist Attorney General, Letitia James," Trump wrote on his social media platform, Truth Social, on Wednesday. Trump is white and James is Black.

"I never thought this case would be brought — until I saw her really bad poll numbers," Trump wrote, referring to James' reelection race. "She is a fraud who campaigned on a 'get Trump' platform, despite the fact that the city is one of the crime and murder disasters of the world under her watch!"

Trump's lawyer, Alina Habba, in a statement Wednesday, said, "Today's filing is neither focused on the facts nor the law – rather, it is solely focused on advancing the Attorney General's political agenda."

"It is abundantly clear that the Attorney General's Office has exceeded its statutory authority by prying into transactions where absolutely no wrongdoing has taken place," Habba said.

"We are confident that our judicial system will not stand for this unchecked abuse of authority, and we look forward to defending our client against each and every one of the Attorney General's meritless claims."

James' office interviewed more than 65 witnesses and reviewed millions of documents part of the investigation, the lawsuit said.

The Manhattan district attorney's office has been conducting a criminal investigation of Trump and his company that mirrors in many ways the allegations made by James in her lawsuit.

But the DA's office has not lodged any criminal charges to date, and since the beginning of this year has appeared unlikely to do so.

After the attorney general's news conference,  DA Alvin Bragg said in a statement, "Our criminal investigation concerning former President Donald J. Trump, the Trump Organization, and its leadership is active and ongoing."

Read the lawsuit against Trump and others here.

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