Former US President Donald Trump has suffered a major setback with a New York judge finding him and his adult sons liable for fraud for highly inflating the value of his properties. For instance, he overestimated the size of the triplex apartment in Trump Tower in which he lived for decades, saying it was 30,000 feet, rather than about 11,000, resulting in an overvaluation of between $114 million and $207 million.
A discrepancy of this magnitude, by a real estate developer sizing up his own living space of decades, can only be deemed a fraud, the judge wrote. The judge also cancelled the Trump Organisation's business certification, saying the Trumps provided false financial statements for roughly a decade.
New York's corporate death penalty
The ruling on Tuesday, which literally calls Trump a cheat, pricks the fantasy bubble that he had built around his persona and which turned him into a national figure and was responsible for his meteoric political rise. This is New York's corporate death penalty, applied to Trump because of years of misconduct, said former federal prosecutor Joyce Vance. The former president and his company deceived banks, insurers and others by massively overvaluing his assets and exaggerating his net worth on paperwork used to make deals and secure financing, the ruling found.
Trump, his sons, and others are liable as a matter of law for persistent violations of New York state law, the judge found. He also found the financial statements the Trumps provided to lenders and insurers for about a decade to be false and said they repeatedly engaged in fraud. The ruling adversely impacts Trump's public image and his business empire.
Might have to pay $250 million in damages
The former president now not only faces the prospect of having to pay $250 million in damages, but could also lose properties such as Trump Tower that are inextricably linked to his brand. There are two New York properties that are part of the lawsuit, the commercial tower at 40 Wall Street and the Trump family compound at Seven Springs.
However, questions remain as to how the receiver would dissolve the properties, if the ruling would impact properties located outside New York state, including Mar-aLago, and if the Trumps could transfer the New York-based assets into a new company located out of state. Trumps lawyer in the case, Christopher M. Kise, called the ruling outrageous and said the decision would be appealed.
It is completely disconnected from the facts and governing law, he said. The decision seeks to nationalise one of the most successful corporate empires in the United States and seize control of private property, all the while acknowledging there is zero evidence of any default, breach, late payment or any complaint of harm, Kise said. The attorney general has sought $250 million in damages, a ban on the Trumps from serving as officers of a business in New York, and a bar on the company from engaging in business transactions for five years.
