New York Attorney General Letitia James has filed a 229-page civil suit against Donald Trump, his three oldest children, and a number of individuals and entities related to the Trump Organization, alleging that they alternately exaggerated and understated the value of Trump’s holdings for years—sometimes to comical degrees—in ways that allowed them to benefit financially.
James, whose investigation of the matter has been publicly known about for some time, discussed the allegations at a Wednesday press conference in Manhattan. She announced that she will be seeking a number of remedies against the Trumps as redress for their participation in the alleged scheme, among them lifetime bans from serving as officers in New York state corporations, a five-year ban on purchasing New York commercial real estate, and $250 million in compensation for the various alleged victims of the fraud.
The fraud alleged by James’ office breaks down roughly into four categories:
1) Playing games with estimates of the value of Trump-owned land in New York state and at Mar-a-Lago that he promised not to develop in exchange for a “conservation easement” tax break. In the former case, Trump is accused of receiving tax credits that would have been much smaller if the land had been valued accurately; in the latter, he’s accused of promising the government that he wouldn’t develop certain land—and then estimating, in personal statements given to financial institutions, what it’d be worth if he did develop it. (One example of the number fudging going on: In the process of considering internally whether to donate the land, Trump et al. are said to have been told by an independent appraiser that a certain number of lots, which the Trumps had estimated in their own financial statements as being worth $23 million each, were actually worth about $700,000 apiece.)
2) Understating the value of Trump International Hotel and Tower in Las Vegas in order to pay less in property taxes. (“We cleaned their clock,” an outside tax counsel is said to have told Eric Trump after a hearing in which an appraiser paid by the Trump Organization painted a dim picture of the tower’s financial outlook for Clark County officials.)
3) Exaggerating the value (and potential value) of various Trump properties so that Deutsche Bank’s “personal wealth” division would give him favorable deals on loans secured by his net worth and “personal guaranty.” Those “personal wealth” loans, the AG says, were available at lower interest rates than those which were being offered by commercial real estate bankers (including Deutsche Bank’s own commercial real estate division) who were not considering his personal guaranty as potential collateral.
This category includes, for example, Trump et al.’s claim that they planned to develop homes in Aberdeen, Scotland, though they had expressly not been given permission to develop said properties by zoning authorities. It also includes Trump’s claim to owning a 30,000-square-foot apartment in Trump Tower (his apartment is actually 10,996 square feet) that could potentially sell for $327 million (a claim made at a time when only one New York City apartment had sold for even $100 million.)
4) Flat-out lying to a company that provided Trump organizations with surety bonds and another company that insured the organizations against litigation risks about whether Trump’s financial statements had been prepared by third parties (they hadn’t been) and whether he and his businesses were the subject of any ongoing governmental litigation that could lead to investigations (they were).
Trump’s representatives have already characterized James’ claims of fraud as meritless and partisan (she is an elected Democrat), and the best guess of legal experts about whether her office can obtain a verdict against him at trial seems to be “maybe, but maybe not!” While the examples of inflated valuations might be embarrassing to Trump personally, the main “victim” as outlined in the suit is Deutsche Bank, whose personal-wealth division is portrayed as eager to win Trump’s business but not so eager to verify or double check any of the financial claims made on his behalf by his representatives. Nor, it would appear from the suit, did Trump ever default on the terms he arranged with the bank.
Cheating on one’s taxes is not a crime generally viewed with sympathy by the public, but on that front, one individual in the commercial real estate business that Slate contacted noted that striving for lowball appraisals for tax purposes—while painting a pretty picture for lenders and investors—is something that “everyone” does. (This person did acknowledge that one can, of course, go “too far” in doing so.)
James sued under a New York state law that allows the attorney general to shut down or completely restructure businesses that engage in “persistent fraud of illegality,” and, if successful, state courts can effectively banish the Trump family from doing business in New York and kneecap the Trump Organization for at least five years. She has also announced that she will make a criminal referral of the matter to U.S. attorneys who cover violations of federal law. Will they take on the job? Will they, like James in Wednesday’s press conference, and like so many others before her, use the mega-cringe phrase “the art of the steal” (it’s like “the art of the deal,” see, but for stealing) in announcing such charges? Stay tuned!