NEW YORK (AP) 鈥� A judge ruled Tuesday that Donald Trump committed fraud for years while building the real estate empire that catapulted him to fame and the White House.
Judge Arthur Engoron, ruling in a civil lawsuit brought by New York鈥檚 attorney general, found that the former president and his company deceived banks, insurers and others by massively overvaluing his assets and exaggerating his net worth on paperwork used in making deals and securing financing.
Engoron ordered that some of Trump鈥檚 business licenses be rescinded as punishment, making it difficult or impossible for them to do business in New York, and said he would continue to have an independent monitor oversee the Trump Organization鈥檚 operations.
A Trump spokesperson did not immediately respond to a request for comment on the ruling. Trump has long insisted he did nothing wrong.
The decision, days before the start of a non-jury trial in Attorney General Letitia James鈥� lawsuit, is the strongest repudiation yet of Trump鈥檚 carefully coiffed image as a wealthy and shrewd real estate mogul turned political powerhouse.
Beyond mere bragging about his riches, Trump, his company and key executives repeatedly lied about them on his annual financial statements, reaping rewards such as favorable loan terms and lower insurance premiums, Engoron found.
Those tactics crossed a line and violated the law, the judge said, rejecting Trump鈥檚 contention that a disclaimer on the financial statements absolved him of any wrongdoing.
鈥淚n defendants鈥� 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鈥檚 lies," Engoron wrote in his 35-page ruling. "That is a is a fantasy world, not the real world.鈥�
Manhattan prosecutors had looked into bringing a criminal case over the same conduct but declined to do so, leaving James to sue Trump and seek penalties that could disrupt his and his family鈥檚 ability to do business in the state.
Engoron鈥檚 ruling, in a phase of the case known as summary judgment, resolves the key claim in James鈥� lawsuit, but six others remain.
Engoron is slated to hold a non-jury trial starting Oct. 2 before deciding on those claims and any punishments he may impose. James is seeking $250 million in penalties and a ban on Trump doing business in New York, his home state. The trial could last into December, Engoron has said.
Trump鈥檚 lawyers had asked the judge to throw out the case, which he denied. They contend that James wasn鈥檛 legally allowed to file the lawsuit because there isn鈥檛 any evidence that the public was harmed by Trump鈥檚 actions. They also argued that many of the allegations in the lawsuit were barred by the statute of limitations.
Engoron, noting that he had 鈥渆mphatically rejected鈥� those arguments earlier in the case, equated them to the 鈥渢ime-loop in the film 鈥楪roundhog Day.'"
James, a Democrat, sued Trump and the Trump Organization a year ago, alleging a pattern of duplicity that she dubbed 鈥渢he art of the steal,鈥� a twist on the title of Trump鈥檚 1987 business memoir 鈥淭he Art of the Deal.鈥�
The lawsuit accused Trump and his company of routinely inflating the value of assets like skyscrapers, golf courses and his Mar-a-Lago estate in Florida, padding his bottom line by billions.
Among the allegations were that Trump claimed his Trump Tower apartment in Manhattan 鈥� a three-story penthouse replete with gold-plated fixtures 鈥� was nearly three times its actual size and valued the property at $327 million. No apartment in New York City has ever sold for close to that amount, James said.
Trump valued Mar-a-Lago as high as $739 million 鈥� more than 10 times a more reasonable estimate of its worth. Trump鈥檚 figure for the private club and residence was based on the idea that the property could be developed for residential use, but deed terms prohibit that, James said.
Trump has denied wrongdoing, arguing in sworn testimony for the case that it didn鈥檛 matter what he put on his financial statements because they have a disclaimer that says they shouldn鈥檛 be trusted. He told James at the April deposition, 鈥淵ou don鈥檛 have a case and you should drop this case.鈥�
鈥淒o you know the banks were fully paid? Do you know the banks made a lot of money?鈥� Trump testified. 鈥淒o you know I don鈥檛 believe I ever got even a default notice, and even during COVID, the banks were all paid? And yet you鈥檙e suing on behalf of banks, I guess. It鈥檚 crazy. The whole case is crazy.鈥�
Engoron rejected that argument when the defense previously sought to have the case thrown out.
The judge said the disclaimer on the financial statements 鈥渕akes abundantly clear that Mr. Trump was fully responsible for the information contained within鈥� them and that 鈥渁llowing blanket disclaimers to insulate liars from liability would completely undercut鈥� the 鈥渋mportant function鈥� that such statements serve 鈥渋n the real world.鈥�
James鈥� lawsuit is one of several legal headaches for Trump as he campaigns for a return to the White House in 2024. He in the last six months 鈥� accused in Georgia and Washington, D.C., of plotting to overturn his 2020 election loss, in Florida of hoarding classified documents, and in Manhattan of falsifying business records related to hush money paid on his behalf.
The Trump Organization was convicted of tax fraud last year in an unrelated criminal case for helping executives dodge taxes on extravagant perks such as Manhattan apartments and luxury cars. The company was fined $1.6 million. One of the executives, Trump鈥檚 longtime finance chief Allen Weisselberg, pleaded guilty and served five months in jail. He is a defendant in James鈥� lawsuit and gave sworn deposition testimony for the case in May.
James鈥� lawsuit does not carry the potential of prison time, but could complicate his ability to transact real estate deals. It could also stain his legacy as a developer.
James has asked Engoron to ban Trump and his three eldest children from ever again running a company based in New York. She also wants Trump and the Trump Organization barred from entering into commercial real estate acquisitions for five years, among other sanctions. The $250 million in penalties she is seeking is the estimated worth of benefits derived from the alleged fraud, she said.
James, who campaigned for office as a Trump critic and watchdog, started scrutinizing his business practices in March 2019 after his former personal lawyer Michael Cohen testified to Congress that Trump exaggerated his wealth on financial statements provided to Deutsche Bank while trying to obtain financing to buy the NFL鈥檚 Buffalo Bills.
James鈥� office previously sued Trump for misusing his own charitable foundation to further his political and business interests. Trump was ordered to pay $2 million to an array of charities as a fine and the charity, the Trump Foundation, was shut down.
Michael R. Sisak, The Associated Press
