Trump’s fraud trial could expose his ‘fantasy world’ – and seriously damage his business interests

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A potentially devastating ruling against Donald Trump has pierced the heart of a decades-old narrative he used to boost his national profile and seduce millions of voters to support his campaigns for the presidency.

That persona was built on a “fantasy” made up of cheating, lying and outright fraud, according to a New York judge presiding over a blockbuster lawsuit from the state’s attorney general, whose investigation revealed the former president, his adult sons, businesses and chief executives “grossly and materially inflated” assets over a decade.

They defrauded banks and insurers by overvaluing properties by billions of dollars, exaggerating the state of his wealth to fraudulently obtain favourable insurance deals, financing and other transactions, according to the lawsuit.

Mr Trump spent those decades navigating threats that would reveal his reputation as a fraud, but a brutal 35-page decision from Judge Arthur F Engoron – if allowed to stand – not only could expose the former president’s alleged history of corruption, it might also take his business empire down with him. Mr Trump himself condemned the decision as a plan to “KILL TRUMP”.

Unlike the four criminal indictments against him, including two separate cases alleging his role at the centre of a fraudulent campaign to overturn 2020 election results, a multi-million dollar fraud lawsuit could do serious damage to his business.

Thus far, the criminal cases against him have not interrupted his campaign fundraising or poll numbers in the race for the 2024 Republican nomination for president. But a judgment against him in an upcoming fraud trial could strip him of his New York businesses and properties on which he has built his brand.

Judge Engoron’s decision granted a summary judgment in Letitia James’ lawsuit, resolving key claims that will make it easier for the state’s attorney general to argue her case in front of a judge. In essence, the judge determined that no trial was necessary to determine that Mr Trump’s financial statements were fraudulent.

Judge Engoron will preside over a bench trial on other counts in her lawsuit without a jury on 2 October. It could take weeks or months to get through; both sides have offered up long lists of potential witnesses, including Mr Trump and his adult children.

“Don’t take this the wrong way,” Trump attorney Christopher Kise asked the judge one day after the ruling, “but what in the court’s mind does this trial look like?”

Ms James’s office does not intend to drop any of the remaining counts in the case.

In her only public statement following the judge’s decision, Ms James simply stated that the judge ruled in her favour, and “we look forward to presenting the rest of our case at trial.”

Mr Kise, the former president’s attorney, told the court in pre-trial filings that Mr Trump is “an investment genius” and “probably one of the most successful real estate developers in the country”.

He is a “master at finding value where others see nothing,” he said.

Judge Engoron’s ruling also accused attorneys 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 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,” the judge wrote.

“This is a fantasy world, not a real world.”

Judge Engoron used the former president’s words against him, citing comments from a deposition citing his comments about “worthless clause” disclaimers included in his financial statements, which Mr Trump has argued insulates him from liability.

“The defences Donald Trump attempts to articulate in his sworn deposition are wholly without basis in law or fact,” Mr Engoron wrote, adding that the documents presented to the court that were provided to banks and insurers “clearly contain fraudulent valuations that defendants used in business.

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

The lawsuit targeting Mr Trump and his Trump Organization umbrella alleges 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.

A recent filing argues that he 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.

Ms James’s 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.

The operations of the Trump Organization, composed of roughly 500 entities under Mr Trump’s effective control, will come further into scrutiny in a civil trial.

In his ruling, Judge Engoron 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 could be appointed to oversee compliance with the order and Mr Trump’s operations and liabilities to lenders, insurers and others.

Ms James also has asked the court to bar Mr Trump from entering into commercial real estate transactions in the state and prevent him from applying for loans – and to block the Trumps from serving as an officer of any corporation in the state.

And Mr Trump could still be on the hook for at least $250m in lost revenue and penalties sought by the attorney general.

Mr Trump repeatedly reminds his supporters of his descent from the “golden escalators” when he launched his 2016 campaign for president, what he has characterised as a turning point in American history. His triplex apartment in that building – Trump Tower on Fifth Avenue – was often on display for news cameras as he paraded his wealth.

If the judge’s ruling is allowed to stand, Mr Trump could be forced to relinquish control of nearly a dozen of his brand-building properties across New York.

The value of the triplex was fraudulently inflated by as much as $207m within four years, according to the lawsuit.

“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,” Judge Engoron wrote.

His Wall Street building was valued by the company at $572m, more than twice the value determined by outside appraisals, according to the lawsuit.

While the scope of the judge’s ruling is unclear, and which could potentially extend to properties controlled by New York companies, Mr Trump’s infamous Mar-a-Lago estate in Florida has come under closer scrutiny. The value of the former president’s current residence was inflated by as much as 2,300 per cent, according to the judge’s order.

The ruling cited an appraisal from the Palm Beach County Assessor’s office that determined its value between $18m and $27.6m.

The stunning decision from the judge follows last year’s filing of a monster lawsuit from the attorney general’s office, stemming from a years-long investigation and building on decades of allegations of fraud.

The three-year probe, launched in the aftermath of Mr Trump’s former attorney Michael Cohen offering bombshell congressional testimony about the business in 2019, included two depositions from the former president. He invoked his Fifth Amendment right nearly 450 times.

Speaking from her office in New York City last year, Ms James said Mr Trump “cheated all of us” by inflating his net worth “to unjustly enrich himself and to cheat the system”.

“This investigation revealed that Donald Trump engaged in years of illegal conduct to inflate his net worth ... to deceive banks and the people of the great state of New York,” she said.