New York attorney general Letitia James says no one is above the law—not even Donald Trump.
She made this statement at a news conference announcing a civil suit against the former U.S. president, the Trump Organization, and the company's senior management in connection with years of alleged financial fraud.
In the 214-page civil complaint, James claimed that Trump falsely inflated his net worth by billions to induce banks to lend money to his company at more favourable terms and to induce insurance companies to provide coverage at higher amounnts for lower premiums.
"Claiming that you have money that you do not have does not amount to the art of the deal. It's the art of the steal," James said.
She maintained that Trump and the Trump Organization "knowingly and intentionally created more than 200 false and misleading valuations of assets on his annual statements of financial condition to defraud financial institutions".
As a result, James is seeking to permanently bar Trump and his children Donald Jr., Ivanka, and Eric from serving as an officer or director in any New York corporation or similar business entity registered in New York state.
Trump and his three eldest children are among the 16 defendants named in the complaint.
In addition, the New York attorney general is asking the court to bar Trump and the Trump Organization from entering into any New York real estate transactions for five years.
That's on top of seeking a disgorgement award of approximately $250 million.
James also revealed that the Office of the Attorney Generl has referred information that warrants a criminal investigation to the U.S. Attorney's Office for the Southern District of New York and the Internal Revenue Service.
Donald Trump Jr. has dismissed the civil complaint as a "Dem witch-hunt".
Below, you can read details of specific allegations, none of which has been proven in court.
Trump Tower Triplex:
Valuations of this property relied on objectively false numbers to calculate property values. For example, Mr. Trump’s own triplex apartment in Trump Tower was valued as being 30,000 square feet when it was 10,996 square feet. As a result, in 2015 the apartment was valued at $327 million in total, or $29,738 per square foot. That price was absurd given the fact that at that point only one apartment in New York City had ever sold for even $100 million, at a price per square foot of less than $10,000, and that sale was in a newly built, ultra-tall tower. In 30 year-old Trump Tower, the record sale at that time was a mere $16.5 million at a price of less than $4,500 per square foot.
Trump Park Avenue:
This property is included as an asset on Mr. Trump’s Statement of Financial Condition from 2011 to 2021 with values ranging between $90.9 million and $350 million. Unsold residential condominium units owned by Mr. Trump or the Trump Organization represented the lion’s share of reported value for this property (in excess of 95% in some years). Reported values of the unsold residential units of the Trump Park Avenue building were significantly higher than the internal valuations used by the Trump Organization for business planning and failed to account for the fact that many units were rent stabilized. For example, an outside, bank-ordered appraisal in 2010 valued the 12 rent-stabilized at $750,000 total. Yet, in the 2011 and 2012 statements, the rent-stabilized apartments at Trump Park Avenue were valued as market rate for nearly $50 million total. In July 2020, the Trump Organization received an appraisal with a value of $84.5 million but on the 2020 Statement the Trump Organization valued Trump Park Avenue at $135.8 million.
40 Wall Street:
The Trump Organization owns a ground lease at 40 Wall Street, meaning it holds a leasehold interest in the land and buildings on the land, but pays rent to the owner. The Trump Organization received a bank-ordered appraisal for the commercial property at 40 Wall Street that calculated a value for the property of $220 million as of November 1, 2012. Yet in the statement that year and the next year (2013), 40 Wall Street was valued at $527 million and $530 million—more than twice the value calculated by the independent, professional appraisers. Even more egregiously, those increased valuations were attributed to information obtained from the same professional appraiser who valued the building at just over $200 million.
In 2015, the Trump Organization replaced the existing loan on the building with a loan from Ladder Capital Finance (working with Mr. Weisselberg’s son, a director there). The Ladder loan was approved based in part on an inflated appraisal prepared by Cushman & Wakefield. Ultimately, the final appraisal for the loan came to a valuation of $540 million through a number of unreasonable adjustments, including reducing costs and changing the assumptions concerning the ground lease. Even this increase was not enough for Mr. Trump and the Trump Organization. The 2015 statement, which was compiled in June, valued the building at $735.4 million — over 35% higher than the already inflated $540 million Cushman appraisal of that same date which the company knew about.
Mr. Trump’s statements misrepresented his holdings of cash, cash equivalent, and marketable securities. Most notably, for several years, included in his “cash” were the amounts in the Vornado Partnership Interests in which Mr. Trump had a minority stake and did not control. In some years these restricted funds accounted for almost one-third of all the cash reported by Mr. Trump. For example, they accounted for $24 million of the total $76 million in cash reported for 2018. Mr. Trump was well aware of the restricted and limited nature of his 30% interest because he personally took part in extensive, contentious litigation regarding these partnerships in which control over partnership-held cash and partnership business choices were expressly addressed.
The statements do not list separate values for each of Mr. Trump’s club facilities. Instead, the values for those properties are lumped together into a single figure. This was done intentionally to conceal significant swings in the value attributed to individual clubs and to conceal the methods used to arrive at those values. This lump sum figure was by far the largest asset value on Mr. Trump’s statement of financial condition every year. Mr. Trump and the Trump Organization employed various deceptive schemes in valuing the clubs to inflate their values.
This property was valued as high as $739 million based on the false premise that it was unrestricted property and could be developed and sold for residential use, even though Mr. Trump himself signed deeds donating his residential development rights, sharply restricting changes to the property, and limiting the permissible use of the property to a social club. In reality, the club generated annual revenues of less than $25 million and should have been valued at closer to $75 million.
- Trump Aberdeen:
The valuation of this golf course in Aberdeen, Scotland assumed 2,500 homes could be developed when the Trump Organization had obtained zoning approval to develop less than 1,500 cottages and apartments, many of which were expressly identified as being only for short-term rental. The $267 million value attributed to those 2,500 homes accounted for more than 80% of the total $327 million valuation for Aberdeen on the 2014 Statement of Financial Condition.
- Trump National Golf Club, Jupiter:
Mr. Trump purchased this golf course in Jupiter Florida for $5 million. Less than a year later, Mr. Trump valued the same property at $62 million on the 2013 statement, a markup of 1,100%. For every year from 2013 to 2020, virtually all of the value attributed to Jupiter was fraudulently overstated due to several deceptive methods and assumptions. The golf course was valued using a fixed-asset approach even though that was not an acceptable method for valuing an operating golf course. The bulk of the value in that fixed-asset approach was based on the use of an inflated purchase price from the purported assumption of “refundable” membership liabilities. Mr. Trump claimed to have paid $46 million for the club, consisting of $5 million in cash he actually paid and $41 million in assumed membership liabilities. In the statements, Mr. Trump did not disclose the inclusion of those inflated liabilities in the price of the club and in fact took the opposite position that his potential liability for those membership deposits was zero. Additionally, the Trump Organization overstated the value of this golf course by adding an additional 30% for the Trump brand in 2013 and 2014 and 15% from 2015 through 2020 – even though the statements disclaimed that any of the valuations included a brand premium.
False and Misleading Statements of Financial Condition Were Used to Secure and Maintain Financial Benefits on Favorable Terms
The statements were used to obtain and maintain favorable loans over at least an 11-year period. All told, the financial benefit realized from this scheme was approximately $250 million, including interest savings and transaction profits, because of the favorable loan terms they were able to obtain using his false and misleading statements.
Trump National Doral:
The Trump Organization executed a $150 million purchase and sale agreement for this property in 2011. Mr. Trump’s statements were used to secure a $125 million loan from Deutsche Bank and were regularly submitted to the bank to fulfill the financial reporting requirements of Mr. Trump as guarantor on the loan. In multiple instances, the loan agreement required that Mr. Trump certify the truth and accuracy of his statements as a condition of the guaranty and the continuing loan covenants.
Trump International Hotel & Tower, Chicago:
Since 2009, this property’s value has been excluded from the statements because, according to sworn testimony, Mr. Trump did not want to take a position that would conflict with his contention to tax authorities that the property had become worthless, and thus formed the basis of a substantial loss under the federal tax code. However, in 2012, using the building or its components as collateral, Mr. Trump and the Trump Organization obtained a $107 million loan on the building from Deutsche Bank. The loan received a $45 million expansion in 2014. Mr. Trump’s supposed net worth of $4 billion reflected on his statement was used to personally guarantee the initial loan at an interest rate approximately four percentage points lower than it would have been without his guaranty.
Trump Old Post Office, Washington, D.C.:
In 2013, the Trump Organization obtained a ground lease from the federal General Services Administration to redevelop this property into a luxury hotel. This project was captained by Ivanka Trump, and Mr. Trump’s statements were central to their effort to win the bid to redevelop this site. They were able to obtain a $170 million loan for construction from Deutsche Bank on much more favorable terms by personally guaranteeing the loans using Mr. Trump’s statements. The loan agreement required that Mr. Trump certify the accuracy of his statements annually and included a provision that made him guarantee that the materials provided to the bank to obtain the loan did not include any misleading information. Any misrepresentation on those statements would constitute a default under the terms of the loan. In May 2022, the Trump Organization sold the Old Post Office property for $375 million. As a result, Mr. Trump obtained more than $100 million in net profit, which was the result of the loan he was able to obtain by using his false and misleading statements.