On September 21, former president Donald Trump received news of yet another legal headache. Letitia James, who is the Attorney General of New York, made the announcement that she had filed a civil lawsuit against the former president. As well as the former president, the suit named the Trump Organization, Ivanka Trump, Donald Trump, Jr., and Eric Trump as additional defendants. The lawsuit was for allegedly making “false and misleading valuations of assets.”
Kimberly Wehle, a law professor at the University of Baltimore, investigates this complaint in an article published on September 26 by the conservative website The Bulwark and explains why it might have severe financial ramifications for the Trumps and the Trump Organization.
Although a trial date is likely years away, Wehle says, Trump has cause to be concerned that the legislation could truly stick this time. At the heart of the complaint is that the State of New York alleges that the defendants grossly, intentionally, and fraudulently inflated their assets by billions of dollars (well over 200 times ) in their dealings with various banks and multiple insurance companies. This was done ‘to induce banks to lend money to the Trump Organization on more favorable terms.” The lawsuit contends that they might not have been able to secure the funds needed to satisfy continuing loan covenants. The inflated evaluations also induce insurers to provide insurance coverage for higher limits and deductibles. According to the lawsuit, these asset appraisals were all done internally, making Trump unable to say that he was not him or had no knowledge.
Wehle says that James’ complaint “doesn’t only claim civil fraud.”
James alleges that the Trumps’repeatedly and consistently violated’ three New York penals: criminal statutes, and that the defendants were involved in various schemes to fabricate corporate records and financial statements, as well as to commit insurance fraud.
Wehle writes that the complaint states that Trump, Don Jr., Eric, Ivanka, and (Trump Organization Chief Financial Officer Allen) Weisselberg agreed to falsify the Statements of Financial Condition, supporting data spreadsheets. Other business records create materially inaccurate written instruments purporting to describe Donald Trump’s financial condition and to submit ‘materially false information.’ To pursue insurance applications’ with the requisite intent that violates state law.
Wehle argues that, while James’ case “cannot result in jail time” for the Trumps because it is solely a civil complaint rather than a criminal charge, it might significantly harm the Trump Organization.
If James prevails at trial, Wehle writes, she hopes to have the corporate certificates of every firm controlled or beneficially owned by Trump annulled under New York law. This means that those firms in their existing form will cease to exist. They include, at a minimum, the companies cited as defendants in the action. One of them is Trump Organization, Inc. This real estate development corporation owns and runs buildings, hotels, golf clubs, restaurants, casinos, and Trump’s Seven Springs golf resort in Bedford, New York. The nullification of the corporate certificates could force Trump to sell or close his business.
Nonetheless, the legal expert notes that it is unclear if the case will get to trial and what a jury would rule.