NY AG files civil fraud suit against Trump, children and company

Letitia James alleges Trump Org manipulated property values

From left: Letitia James, Donald Trump, Eric Trump, Ivanka Trump, Allen Weisselberg, and Donald Trump Jr. (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images)
From left: Letitia James, Donald Trump, Eric Trump, Ivanka Trump, Allen Weisselberg, and Donald Trump Jr. (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images)

UPDATED, Sept. 21, 2022, 12:50 p.m.: The New York attorney general made a long-awaited move on Wednesday, filing a civil lawsuit against Donald Trump, the Trump Organization and some of the former president’s children.

In the 220-page lawsuit, Letitia James alleged large-scale fraud by Trump and his organization, claiming property values were inflated to land more favorable loans or lower taxes.

The lawsuit said there were more than 200 instances of fraud in a 10-year period, including inflated values at marquee Trump properties, including 40 Wall Street and Trump Tower.

The consequences James is seeking in the lawsuit are far-reaching. James is asking for the named members of the Trump family to be ousted from leadership of the Trump Organization, along with an independent monitor appointed to oversee the company’s financial practices.

The attorney general also wants the family banned from acquiring real estate in New York for five years and wants some of the company’s New York operations shut down. Additionally, Trump and his children who are defendants — Eric, Ivanka and Donald Jr. — would be banned from serving as officers or directors of any New York company.

James referred the findings of her investigation to federal prosecutors; her office doesn’t have jurisdiction over most criminal matters.

Read more

At 40 Wall Street, a 1 million-square-foot office tower, James’ lawsuit alleged that bank-ordered appraisals valued the property at $200 million as of Aug. 1, 2010, and $220 million as of Nov. 1, 2012. Yet Trump’s firm listed the building’s value at $524 million and increased it to $527 million in 2012 and to $530 million in 2013 — “more than twice the value calculated by the ‘professionals,’” according to the lawsuit.

James also alleged that Trump’s triplex apartment in Trump Tower was “valued as being 30,000 square feet when it was 10,996 square feet” and pegged to be worth $327 million, or $29,738 per square foot, in 2015. At that point, only one apartment in New York City had ever sold for $100 million or $10,000 per square foot, according to the complaint.

Sign Up for the undefined Newsletter

That $100 million apartment sold in a new tower, while Trump’s building was 30 years old and its record sale was $16.5 million, or $4,500 per square foot, in 2015.

In another example, James claims that “rent-stabilized apartments at Trump Park Avenue were valued as if they were unrestricted, leading to a nearly $50 million valuation for those units.” However, an appraisal that recognized the units’ stabilized status valued them collectively at just $750,000, according to the complaint.

It’s worth noting that the civil lawsuit is just that: a lawsuit. Proving the accusations is an uphill battle, as property valuations are highly subjective. Showing intentional fraud will be necessary, but that will likely require a cooperating witness or problematic email, a communication tool Trump avoids.

A lawyer for Trump, in a statement to NBC News on the lawsuit, repeated the former president’s oft-touted claims that James is motivated by politics.

The lawsuit “is neither focused on the facts nor the law — rather, it is solely focused on advancing the attorney general’s political agenda,” lawyer Alina Habba told the outlet. “It is abundantly clear that the attorney general’s office has exceeded its statutory authority by prying into transactions where absolutely no wrongdoing has taken place.”

Trump has consistently denied wrongdoing and invoked his Fifth Amendment right more than 400 times in an August deposition with James’ office, only answering a question about his name. Eric followed with a similar response, invoking the right more than 500 times in October 2020.

Donald Trump Jr., the former president’s eldest son who is an executive at the Trump Organization with his younger brother Eric, answered investigators’ questions in August, along with his sister Ivanka, a former executive at the company.

The civil lawsuit is the latest headache for Trump, who was recently subjected to an FBI search of Mar-a-Lago, his club and residence in Palm Beach, Florida. He is facing a federal investigation regarding storage of sensitive documents, which the former president has claimed were declassified.

This story has been updated with additional context.