Judge Rules Donald Trump Committed Fraud While Building Real Estate Empire

In a significant legal blow to former President Donald Trump, New York Supreme Court Judge Arthur F. Engoron ruled on Tuesday that Trump had committed fraud over a span of years during the construction of his real estate empire, which played a pivotal role in his rise to fame and ultimately the White House.

The ruling came as part of a civil lawsuit brought forward by New York’s Attorney General, Letitia James, who alleged that Trump and his company had engaged in deceptive practices, including inflating asset values and exaggerating net worth figures on documents used for various deals and financing arrangements.

As a result of this ruling, Judge Engoron ordered the revocation of some of Trump’s business licenses, a move that could severely hamper or even prohibit Trump’s business operations in New York. Additionally, an independent monitor will be appointed to oversee the Trump Organization’s activities.

A spokesperson for Donald Trump did not provide an immediate response to the ruling, but Trump has consistently maintained his innocence throughout the legal proceedings.

This judgment, which arrives just days before a non-jury trial in Attorney General Letitia James’ lawsuit is set to commence, represents a significant setback for Trump. It casts a shadow over his carefully cultivated image as a wealthy and astute real estate magnate who transitioned into a prominent political figure.

Judge Engoron’s ruling specifically found that Trump, his company, and key executives repeatedly misled various parties about their financial assets, leading to favorable loan terms and lower insurance premiums. Trump’s defense, which relied on disclaimers present in financial statements, was rejected by the judge.

“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,” wrote Judge Engoron in his 35-page ruling. “That is a fantasy world, not the real world.”

It’s worth noting that Manhattan prosecutors had considered pursuing a criminal case over similar allegations but ultimately chose not to, leaving Attorney General Letitia James to pursue civil penalties that could disrupt Trump’s business operations in New York.

While this ruling addresses the core claim in James’ lawsuit, six other claims remain to be resolved. Judge Engoron is scheduled to preside over a non-jury trial starting on October 2, during which these remaining claims and potential penalties will be considered. Attorney General James is seeking $250 million in penalties and a ban on Trump conducting business in his home state of New York. The trial may extend into December.

Trump’s legal team had previously sought to have the case dismissed, arguing that there was no evidence of harm to the public resulting from Trump’s actions and that some allegations were barred by the statute of limitations. Judge Engoron dismissed these arguments, likening them to a “time-loop in the film ‘Groundhog Day.'”

Letitia James, a Democrat, filed the lawsuit against Trump and the Trump Organization one year ago, accusing them of consistently overvaluing assets such as skyscrapers, golf courses, and the Mar-a-Lago estate in Florida. These inflated valuations allegedly boosted Trump’s bottom line by billions of dollars.

For instance, Trump claimed that his Manhattan Trump Tower apartment, complete with gold-plated fixtures, was nearly three times its actual size and valued at $327 million. Trump also valued Mar-a-Lago at an astonishing $739 million, more than ten times the property’s more reasonable estimate.

Throughout the legal proceedings, Trump argued that disclaimers on his financial statements absolved him of responsibility, asserting that the information in those documents should not be trusted. However, Judge Engoron firmly rejected this argument, emphasizing that the disclaimers held Trump fully responsible for the information within the statements.

While James’ lawsuit does not carry the potential for prison time, it could complicate Trump’s ability to engage in real estate transactions and tarnish his legacy as a developer. Attorney General James has requested that Trump and his three eldest children be prohibited from running a New York-based company ever again. She also seeks a five-year ban on Trump and the Trump Organization engaging in commercial real estate acquisitions, among other sanctions. The $250 million in penalties she seeks corresponds to the estimated benefits derived from the alleged fraud.

Letitia James initiated her scrutiny of Trump’s business practices in March 2019 following testimony by Trump’s former personal lawyer, Michael Cohen, who claimed that Trump had inflated his wealth on financial statements provided to Deutsche Bank while pursuing financing for the purchase of the NFL’s Buffalo Bills.

Previously, James’ office sued Trump for misusing his charitable foundation to advance his political and business interests. In that case, Trump was ordered to pay $2 million in fines to various charities, and the Trump Foundation was shut down.