Donald Trump defrauded banks and insurers by grossly inflating his wealth, judge rules

A major ruling to revoke his business licences finds the former president massively overvalued assets as his empire expanded

Alex Woodward
Tuesday 26 September 2023 23:22 BST
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Related video: New York Attorney General announces lawsuit against Donald Trump

A New York judge has determined that Donald Trump committed fraud by falsely inflating his wealth and assets by billions of dollars, a partial conclusion to a sweeping lawsuit and a years-long investigation from the state’s attorney general taking aim at the former president’s business empire.

The ruling from Judge Arthur F Engoron on 26 September found that the former president, his two adult sons, his companies and chief associates defrauded banks and insurers by grossly overvaluing assets and exaggerating his net worth on documents to secure deals and financing.

Judge Engoron has ordered several of the former president’s licences to be rescinded, effectively upending his abilities to do business in the state. An independent monitor also will continue to oversee compliance with the order and Mr Trump’s operations and liabilities to lenders, insurers and others.

The decision follows a $250m civil suit from New York Attorney General Letitia James, whose investigation targeted long-running fraud allegations surrounding Mr Trump’s business practices.

A decision arrived days before the start of a non-jury trial, but the partial judgment – a major victory for Ms James and state investigators – resolves key claims in the lawsuit, which the former president’s legal team has repeatedly tried to dismiss. Mr Trump, meanwhile, has tried to sue the judge to block the trial from moving forward. A state appeals court is expected to rule on his case this week.

The decision instead will narrow the issues to be heard at trial, delivering a massive blow to Mr Trump and his mountain of legal obstacles – including four criminal indictments and another defamation lawsuit – as he seeks the Republican nomination for president in 2024.

Judge Engoron also has ordered $7,500 in sanctions against attorneys for Mr Trump.

His ruling eviscerated attorneys’ “fantasy world” legal arguments and accused them of wasting the court’s time with “repetitive, frivolous” filings that sought to delay the proceedings, adding that the sworn statements in Mr Trump’s depositions are “wholly without basis in law or fact.”

In a statement posted to his Truth Social account, the former president claimed that the findings in the judge’s decision are “false” and raged in all-caps that he is worth “much more” than what is shown in filings, which don’t include what he called his most valuable asset: his “brand”.

He then appeared to defend the statements that have been labelled as fraudulent by claiming that a “disclaimer clause” tells “anyone reviewing the data,” including banks, that they must “do their own research and analysis” to verify those claims.

The judge’s ruling, however, stresses that Mr Trump cannot “rely on a disclaimer” to misrepresent facts.

Mr Trump said that his company has been “slandered and maligned” by a “politically motivated witch hunt.”

He also called on help from the “highest courts in the state” and federal authorities.

New York Attorney General Letitia James
New York Attorney General Letitia James (REUTERS)

The lawsuit from Ms James’s office, which followed a three-year probe and a review of millions of documents, seeks to recover $250m in lost revenue and penalties, as well as a judge’s order that would permanently bar the Trumps from holding any offices with businesses in the state.

A recent filing from Ms James argued that Mr Trump fraudulently inflated his net worth by as much as $2.2bn in one year and by hundreds of millions of dollars in other years over a decade.

Her motion for partial summary judgment estimated that Mr Trump inflated his net worth by $812m to $2.2bn – roughly 17 to 39 per cent each year from 2011 to 2021. The $2.2bn estimate came in 2014, according to the recently unsealed filing.

Mr Trump has repeatedly branded Ms James and other Black Democratic elected prosecutors as “racists” leading politically motivated investigations to prevent him from running for office.

Her lawsuit alleges that the Trump Organization and its key players made more than 200 false and misleading evaluations of its assets over a 10-year period from 2011 to 2021.

In a press conference announcing her massive civil case last year, she described the multiple “statements of financial condition” prepared by his former accounting firm – at his direction – as “exaggerated, grossly inflated objectively false, and therefore fraudulent, and illegal”.

The lawsuit includes descriptions of 23 assets related to Mr Trump and his empire that investigators believe were “grossly and fraudulently inflated”. Court documents depict a pattern of dubious business practices, including fraudulent valuations of his New York golf course, namesake Manhattan tower and other properties.

Last year, two Trump Organization subsidiaries were found guilty on criminal fraud charges stemming from what New York prosecutors described as “culture of fraud and deception” in a multi-decade scheme to avoid paying payroll taxes by compensating top executives with untaxed benefits such as housing and automobiles. The company was ultimately fined $1.6m earlier this year.

The Trump Organization’s long-time chief financial officer, Allen Weisselberg, who is also implicated in Ms James’s civil suit, also previously pleaded guilty to several related crimes.

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