Donald Trump was found liable for fraud ahead of trial in the state attorney general's lawsuit accusing him of exaggerating his net worth by billions of dollars a year on financial records submitted to banks and insurers, a major blow to the former president in the biggest civil case against him.
The ruling Tuesday by Justice Arthur Engoron in Manhattan resolves the state's biggest claim against the former president and narrows a trial set to start as soon as Oct. 2. The non-jury trial will now focus on the state's remaining claims including falsifying business records and issuing false financial statements. The suit seeks $250 million in restitution and other penalties.
Engoron held that New York Attorney General Letitia James, who filed the suit in September 2022, had demonstrated liability by Trump as well as his sons Donald Trump Jr. and Eric Trump, along with the Trump Organization and its former chief financial officer, Allen Weisselberg. He also ordered Trump's lawyers, including Christopher Kise, to pay sanctions of $7,500 each for repeatedly advancing failed legal theories in the case.
The judge concluded his ruling by saying James is now entitled to a court order dissolving any certificates issued to Trump's LLCs under New York's executive law, putting at risk his ability to continue operating his sprawling Manhattan-based company.
Though the case has been overshadowed in recent months by the four criminal cases filed against Trump, James's case could have far-reaching consequences. Along with monetary penalties, the attorney general is seeking to bar Trump from serving as an officer or director in any company in the state where he was born and where he first rose to fame.
Trump's lawyers didn't immediately respond to messages seeking comment on the ruling.
The suit accuses Trump of inflating the value of the former president's biggest assets from 2011 to 2021 to get better terms from banks and insurers. The judge sided with James on her allegation that Trump repeatedly engaged in fraud by claiming exaggerated values for some of his best properties on his annual statements of financial condition.
The judge cited in his ruling several examples, including that the former president's frequent claim that his Trump Tower penthouse was three times as big as it actually was, even after he was alerted to the error.
"A discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud," the judge wrote.
Engoron also said in his ruling that Trump had flouted an earlier court order intended to rein in alleged violations of New York business law during the litigation.
"Even with a preliminary injunction in place, and with an independent monitor overseeing their compliance, defendants have continued to disseminate false and misleading information while conducting business," Engoron said.
Trump, who claims James's lawsuit is politically motivated, is likely to appeal the ruling. He's also making a last-ditch effort to delay the trial by arguing to a New York appeals court that Engoron failed to narrow the case after an
James argued a trial on her fraud claim wasn't necessary because the evidence that Trump violated New York's Executive Law was overwhelming. The attorney general said in court filings that her team gathered proof that Trump inflated his net worth annually by as much as
Trump argued against the state's motion for so-called summary judgment, saying the annual statements of financial condition that he gave to banks and insurers had "powerful disclaimers" saying they should do their own valuations. He has also argued that James didn't have a right to sue because the banks and insurers didn't suffer any financial losses.
The case is New York v. Trump, 452564/2022, New York State Supreme Court (Manhattan).
