New York AG Letitia James files $250M lawsuit against Trump for defrauding lenders, others

NEW YORK (ABC NEWS) — For 20 years, Donald Trump and his family enriched themselves through “numerous acts of fraud and misrepresentations,” New York Attorney General Letitia James alleges in a new lawsuit that accuses the Trumps of “grossly” inflating the former president’s net worth by billions of dollars and cheating lenders and others with false and misleading financial statements.

The civil lawsuit, filed Wednesday in State Supreme Court in Manhattan, seeks a $250 million judgment and a prohibition on any of the Trumps leading a company in the state of New York.

Among other allegations, the suit claims that the former president’s Florida estate and golf resort, Mar-a-Lago, was valued as high as $739 million, but should have been valued at around one-tenth that amount, at $75 million. The suit says that higher valuation was “based on the false premise that it was unrestricted property and could be developed for residential use even though Mr. Trump himself signed deeds donating his residential development rights and sharply restricting changes to the property.”

James is referring her findings to federal prosecutors in Manhattan, who could possibly open a criminal investigation into bank fraud, according to a footnote in the lawsuit.

Through “persistent and repeated business fraud,” the Trumps convinced banks to lend money to the Trump Organization on more favorable terms than deserved, according to the lawsuit, which named the former president, three of his adult children, the company, and two of its executives, Allan Weisselberg and Jeff McConney.

“Mr. Trump made known through Mr. Weisselberg that he wanted his net worth on the Statements to increase — a desire Mr. Weisselberg and others carried out year after year in their fraudulent preparation of the Statements,” the lawsuit said. “The scheme to inflate Mr. Trump’s net worth also remained consistent year after year.”

Weisselberg last month pleaded guilty to unrelated criminal charges of tax evasion brought by the Manhattan district attorney’s office, which has been conducting a parallel investigation.

Trump has denied wrongdoing and has called the investigation a politically motivated “witch hunt” by an attorney general he has called “racist.” James, who is black, rejected a settlement offer from the Trump Organization last month to resolve the matter, sources told ABC News.

During a deposition last month, Trump repeatedly invoked his Fifth Amendment right against self-incrimination. The lawsuit includes numerous instances in which Trump invoked the Fifth when asked to explain how the company calculated the value of certain properties. In a civil trial, jurors would be able to draw a negative inference about Trump declining to answer.

The attorney general’s investigation began in March 2019, after Trump’s former lawyer, Michael Cohen, testified before Congress that Trump’s annual financial statements inflated the values of Trump’s assets to obtain favorable terms for loans and insurance coverage, while also deflating the value of other assets to reduce real estate taxes.

The suit also said a 2012 statement valued rent-stabilized apartments in the Trump Park Avenue property as if they could be rented at market value. As a result, units collectively worth $750,000 were valued at nearly $50 million, according to the lawsuit.

Trump Turnberry, a golf club in Scotland, was valued at nearly $127 million, but the suit said that since it opened in 2017 the golf course has operated at a loss each year.

“As a result, using values for the golf course ranging between $123 million and $126.8 million based on employing the Fixed Asset Scheme is materially false and misleading; the golf course should have been valued at a much lower figure,” the attorney general’s suit said.

“The magnitude of financial benefit derived by Mr. Trump and the Trump Organization by means of these fraudulent and misleading submissions was considerable,” the suit said.

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