By A judge on Tuesday ruled that Donald Trump and his company are liable for fraud by misstating the true values of multiple real estate properties for years and thus grossly overstating the former president’s net worth by billions of dollars.
Judge Arthur Engoron in his bombshell decision also canceled the New York business certificates of Trump, the Trump Organization, and the other defendants, including two of his sons, in a lawsuit by the state Attorney General’s Office.
The judge said he would appoint an independent receiver to manage the dissolution of the corporate entities whose business certificates he canceled.
It is not clear whether Engoron’s decision means the Trump Organization and related entities will have to completely cease doing business in New York, or whether the companies can be legally reconstituted later.
A spokeswoman for Attorney General Letitia James declined to comment on that question.
But Trump’s lawyer Chris Kise, who called the decision “outrageous,” said it “seeks to nationalize one of the most successful corporate empires in the United States and seize control of private property all while acknowledging there is zero evidence of any default, breach, late payment or any complaint of harm.”
“While the full impact of the decision remains unclear, what is clear is that President Trump and his family will seek all available appellate remedies to rectify this miscarriage of justice,” Kise said.
Engoron’s ruling, which also dismissed Trump’s request to dismiss the case, did not settle six other claims in dispute in the case whose defendants included him, the company and his sons Donald Trump Jr. and Eric Trump, as well as former Trump Organization Chief Financial Officer Allen Weisselberg, company executive Jeff McConney.
Those issues remaining claims will be addressed at a nonjury trial due to begin Monday.
James is seeking $250 million in damages in the case and wants Trump and his two adult sons barred from doing business in the state.
Engoron, in granting partial summary judgment to James on the fraud claim, found that Trump made false and misleading valuations for multiple real estate assets in statements to insurers and banks for years as he sought more favorable terms on insurance coverage and loans.
Because of those misstatements, Trump also inflated his true net worth in annual financial statements by billions of dollars, according to the decision.
“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,” Engoron wrote.
“That is a fantasy world, not the real world.”
Engoron also ordered sanctions of $7,500 for five attorneys who represented the Trump defendants for making frivolous and previously rejected arguments in court filings. Kise is among those fined by the judge.
“Today, a judge ruled in our favor and found that Donald Trump and the Trump Organization engaged in years of financial fraud,” James wrote in a post on the X social media site.
“We look forward to presenting the rest of our case at trial,” James added.
Trump, the front-runner for the 2024 Republican presidential nomination, separately faces a total of 91 felony charges in four criminal cases. Two of those cases relate to efforts to reverse his re-election defeat in 2020. Another case involves his retention of classified government documents at his Mar-a-Lago club in Florida, a property that is mentioned in Engoron’s ruling Tuesday.
In the fourth criminal case, Trump is charged with falsifying business records related to a 2016 hush money payment to porn star Stormy Daniels.
He has pleaded not guilty to all of the charges.
Engoron in his ruling wrote that James’ office in its civil fraud suit “has prevailed on liability on its first cause of action … as against all defendants.”
The judge added that if liability for fraud is established under New York law, that statute allows the attorney general to obtain an order enjoining defendants from continuing to do business or “any fraudulent or illegal acts.”
Even after Engoron appointed an independent financial monitor for the Trump Organization last year, “defendants have continued to disseminate false and misleading information while conducting business,” the judge wrote.
“This ongoing flouting of this Court’s prior order, combined with the persistent nature of the false [statements of financial condition] year after year, have demonstrated the necessity of canceling the [defendants’ business] certificates … as the statute provides,” the judge wrote.
Engoron’s 35-page ruling details how Trump fraudulently valued his Mar-a-Lago club in Palm Beach, once by more than 2,000%, Trump Park Avenue and 40 Wall Street in New York City, his Seven Springs property in Westchester County, New York, and his golf course in Aberdeen, Scotland.
“Time and time again, the Court is not comparing one appraisal to another; it is comparing an independent professional appraisal to a pie-in-the-sky dream of concocted potential,” Engoron wrote.
After noting that Trump submitted statements falsely claiming that the Trump Tower apartment in which he resided for decades was nearly three times its actual size, and was worth a whopping $327 million, the judge wrote, “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 documents here clearly contain fraudulent valuations that defendants used in business,” Engoron wrote.
“Defendants respond that: the documents do not say what they say; that there is no such thing as ‘objective’ value; and that, essentially, the Court should not believe its own lying eyes,” the judge noted.
Kise, the Trump attorney, said Engoron’s “outrageous decision is completely disconnected from the facts and governing law.’
“The Court ignored fully the Appellate Division mandate and basic legal, accounting and business principles,” Kise said. “Without even conducting a trial, the Court substituted its own judgment for that of nationally recognized experts from the NYU Stern School of Business and beyond. More importantly, the Court disregarded the viewpoint of those actually involved in the loan transactions who testified there was nothing misleading, there was no fraud, and the transactions were all highly profitable.”
Another Trump attorney, Alina Habba, in a statement said, “It’s important to remember that the Trump Organization is an American success story and the fact that a judge without trial would say there is no question of fact and issue a decision like this in summary judgement is concerning.”
Habba who was among the attorneys sanctioned by Engoron.
Trump responded to Engoron’s ruling by reposting a statement on social media attacking James and the judge, while doubling down on his claims of having a much higher net worth than what was displayed on the financial statements at the center of the fraud case.
“It is very unfair, and I call for help from the highest Courts in New York State, or the Federal System, to intercede,” Trump wrote in a post on his Truth Social site.
In a tweet Tuesday, Eric Trump, who runs the Trump Organization with Donald Trump Jr., wrote, “In an attempt to destroy my father and kick him out of New York, a Judge just ruled that Mar-a-Lago, in Palm Beach Florida, is only worth approximate ‘$18 Million dollars’ “
“Mar-a-Lago is speculated to be worth [well] over a billion dollars making it arguably the most valuable residential property in the country. It is all so corrupt and coordinated,” Eric wrote.
