Trump inflated net worth by billions to get favorable loans, obtaining $250M in benefits, NY attorney general says
Former President Donald Trump in August 2019. Photo from Shutterstock.
Former President Donald Trump obtained hundreds of millions of dollars in real estate loans and favorable insurance coverage based on financial statements that inflated his net worth by billions of dollars, according to a lawsuit filed Wednesday by the New York attorney general.
“Claiming you have money that you do not have does not amount to the art of the deal,” New York Attorney General Letitia James said in a press conference. “It is the art of the steal.”
A press release is here and the 214-page lawsuit, filed in New York state court, is here.
The suit seeks disgorgement of financial benefits obtained as a result of the scheme, estimated at $250 million.
Trump personally guaranteed loans based on an inflated net worth, which made it possible to obtain properties with favorable loan terms, James said during the press conference. She offered an example: Trump used inflated values to redevelop the Old Post Office in Washington D.C., into a luxury hotel and then later sold the property at a net profit of more than $100 million.
Trump was also able to obtain insurance coverage for higher limits and lower premiums, according to a summary of the allegations in the press release. And Trump obtained tax benefits by inflating the value of donated conservation easements treated as charitable donations, according to the suit.
Defendants named in the suit include Trump; his children Donald Trump Jr., Eric Trump and Ivanka Trump; the Trump Organization; the company’s former chief financial officer, Allen Weisselberg; and the Donald J. Trump Revocable Trust, which owns the entities that make up the Trump Organization.
James also wants to bar Trump and his adult three children named as defendants from service as an officer or director in any New York corporation for five years, to bar Trump and his company from obtaining New York commercial property for five years, and to bar Trump and his company from applying for loans from New York-registered financial institutions for five years. She is also seeking to replace trustees of the revocable trust with new, independent trustees and to appoint a monitor to oversee compliance.
The suit was brought under Section 63(12) of the New York Executive Law, which permits the state attorney general to sue when a person engages in repeat fraudulent or illegal acts in the conduct of a business. The illegal conduct alleged includes falsification of business records, issuance of false financial statements, insurance fraud, and a conspiracy to commit the illegal acts. The suit also alleges bank fraud and false statements to financial institutions, which are criminal law violations.
James is making referrals based on her office’s investigation to federal prosecutors and the Internal Revenue Service.
James called the pattern of fraud “astounding.”
Trump is accused of inflating his net worth by billions of dollars, year after year. According to the state attorney general, 11 statements of financial condition covering the years 2011 to 2021 contained more than 200 false and misleading valuations of assets.
“It was a scheme that, by its very nature, became more profitable over time. And it is all in stark violation of the law,” James said.
Asked whether she was trying to shut Trump down, James answered that Trump could reorganize and reconstruct his corporations. But the suit seeks reform of his practices in New York.
