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, and ordered some of the former president’s companies removed from his control and dissolved.
Judge Arthur Engoron, ruling in a civil case brought by New York Attorney General Letitia James, found that Trump and his company defrauded banks, insurers and others by massively overvaluing his assets and exaggerating his net worth on paperwork used to make deals and secure loans.
Engoron ordered that some of Trump’s business licenses be revoked 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’s operations.
Unless successfully appealed, the order would strip Trump of his authority to make strategic and financial decisions about some of his key properties in the state.
Trump lashed out at the decision in a series of statements, calling it “un-American” and part of an ongoing plot to damage his campaign to return to the White House.
“My civil rights have been violated and an appellate court, federal or state, must reverse this horrible, un-American decision,” he wrote on his Truth Social website. He insisted his company had “done a great job for the State of New York” and “conducted business perfectly”, calling it “a very sad day for the New York State system of justice!”
Trump’s lawyer, Christopher Kise, said they would appeal, calling the decision “completely divorced from the facts and applicable law”.
Engoron’s ruling, days before a non-jury trial is set to begin in James’ lawsuit, is the strongest rebuke yet of Trump’s carefully coiffed image as a wealthy and shrewd real estate mogul turned political powerhouse.
Beyond mere bragging about his wealth, Trump, his company and key executives repeatedly lied about it on his financial statements, reaping rewards such as favourable loan terms and lower insurance costs, Engoron found.
These tactics crossed a line and violated the law, the judge said, rejecting Trump’s claim that a disclaimer on the financial statements absolved him of any wrongdoing.
“In the defendants’ world, rent-regulated apartments are worth the same as unregulated apartments; restricted land is worth the same as unrestricted land; restrictions can evaporate; a disclaimer by one party that places responsibility on another party exonerates the other party’s lies,” Engoron wrote in his 35-page ruling. “This is a fantasy world, not the real world.”
Manhattan prosecutors had considered bringing criminal charges for the same conduct but declined to do so, leaving James to sue Trump and seek sanctions aimed at disrupting his and his family’s ability to do business.
Engoron’s ruling, at a stage of the case known as summary judgment, resolves the main claim in James’ lawsuit, but several others remain. He’ll rule on those claims, as well as James’ request for $250 million in penalties, in a trial that begins on 2 October, and Trump’s lawyers have asked an appeals court for a delay.
“Today, a judge ruled in our favour and found that Donald Trump and the Trump Organisation engaged in years of financial fraud,” James said in a statement. “We look forward to presenting the rest of our case at trial.”
Trump’s lawyers, in their own motion for summary judgment, had asked the judge to throw out the case, arguing that there was no evidence that the public had been harmed by Trump’s actions. They also argued that many of the allegations in the lawsuit were time-barred.
Engoron, noting that he had rejected these arguments earlier in the case, likened them to the plot of the film Groundhog Day. He fined five defence lawyers $7,500 each as punishment for engaging in “repetitive, frivolous” arguments, but denied James’ request to sanction Trump and other defendants.
James, a Democrat, sued Trump and the Trump Organisation a year ago, accusing them of routinely inflating the value of assets including skyscrapers, golf courses and his Mar-a-Lago estate in Florida, padding his bottom line by billions.
Engoron found that Trump consistently overvalued Mar-a-Lago, inflating its value by as much as 2,300% on one financial statement. The judge also blasted Trump for lying about the size of his Manhattan apartment. Trump claimed his three-storey Trump Tower penthouse was nearly three times its actual size, valuing it at $327 million.
“A discrepancy of this magnitude from a real estate developer who has been sizing up his own living space for decades can only be considered fraud,” Engoron wrote.
On X following the ruling, Eric Trump insisted that his father’s claims about Mar-a-Lago were correct, writing that the Palm Beach property “is speculated to be worth well over a billion dollars, making it arguably the most valuable residential property in the country”. He called the ruling and the lawsuit “an attempt to destroy my father and run him out of New York”.
Under the ruling, the limited liability companies that control some of Trump’s key properties, such as 40 Wall Street, will be dissolved and authority over how they are run will be handed over to a trustee. Trump would lose his authority over who to hire or fire, who to lease office space to, and other key decisions.
“The decision seeks to nationalise one of the most successful business empires in the United States and seize control of private property, all while acknowledging that there is no evidence of any default, breach, late payment, or complaint of harm,” Kise said after the decision.
James’ lawsuit is one of several legal headaches for Trump, the Republican frontrunner in next year’s election. He has been indicted four times in the past six months – in Georgia and Washington, D.C., on charges of conspiring to overturn his 2020 election loss; in Florida, on charges of hoarding classified documents; and in Manhattan, on charges of falsifying business records related to hush money paid on his behalf.
The Trump Organisation was convicted last year in an unrelated criminal case of tax fraud for helping executives dodge taxes on perks such as apartments and cars. The company was fined $1.6m. One executive, Trump’s longtime finance chief Allen Weisselberg, pleaded guilty and served five months in prison.
James’ office previously sued Trump for misusing his charitable foundation to advance his political and business interests. Trump was ordered to donate $2 million to charity as a fine, while his own charity, the Trump Foundation, was shut down.
