Kara Sears
Former US President Donald Trump and his company have been accused of violating New York's anti-fraud laws. The New York Attorney General Letitia James has brought a civil lawsuit against Trump and his business empire, alleging that they provided banks with financial statements that misrepresented his wealth by as much as $3.6 billion. This is a serious allegation, as it could result in the dissolution of Trump's business empire.
| Characteristics | Values |
|---|---|
| Law | New York Executive Law, New York's Martin Act |
| Violation | Repeatedly misrepresented wealth by as much as $3.6 billion |
| Punishment | Business certificates cancelled, business empire potentially dissolved |
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What You'll Learn
Misrepresenting his wealth by as much as $3.6 billion
Donald Trump and his company have been found to have "repeatedly" violated state fraud law, according to a New York judge. The ruling came in response to a request by New York Attorney General Letitia James, who was seeking judgment on one of the claims in her $250 million civil lawsuit.
Judge Arthur Engoron agreed with James' office that it is beyond dispute that Trump and his company provided banks with financial statements that misrepresented his wealth by as much as $3.6 billion. "The documents here clearly contain fraudulent valuations that defendants used in business," Engoron wrote in his ruling.
The ruling has potentially serious consequences for Trump, who could see his sprawling real estate business empire ordered "dissolved" for repeated misrepresentations on financial statements to lenders. This would add him to a short list of scam marketers, con artists and others who have been hit with the ultimate punishment for violating New York's powerful anti-fraud law.
The anti-fraud laws that Trump has been found to have violated include New York's Martin Act and Executive Law § 63(12). The latter law gives the state's attorney general powers to investigate and prosecute cases of civil fraud.
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Inflating and deflating the value of his assets
Donald Trump and his company "repeatedly" violated state fraud law, a New York judge ruled in September 2023. The ruling came in response to a request by New York Attorney General Letitia James seeking judgment on one of the claims in her $250 million civil lawsuit.
Judge Arthur Engoron agreed in his ruling with James' office that it is beyond dispute that Trump and his company provided banks with financial statements that misrepresented his wealth by as much as $3.6 billion. "The documents here clearly contain fraudulent valuations that defendants used in business," Engoron wrote in his ruling, in which he ordered the defendants' New York business certificates canceled.
James's office said the former president's company engaged in decades of fraud by inflating and deflating the value of its assets to pay lower taxes and receive better insurance coverage. This practice, known as "asset valuation fraud", involves deliberately misrepresenting the value of assets on financial statements to benefit financially. In Trump's case, it is alleged that he inflated the value of his assets to secure loans and investments, and deflated their value to reduce tax liabilities and insurance premiums.
This type of fraud is a serious criminal offence and can result in significant penalties, including fines, imprisonment, and the dissolution of the business. It is a violation of New York's powerful anti-fraud laws, including the Martin Act and Executive Law § 63(12), which have been previously employed by the OAG against two Trump businesses.
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Violating New York's Martin Act
New York Attorney General Letitia James sought judgment on one of the claims in her $250 million civil lawsuit against former President Donald Trump. Judge Arthur Engoron ruled that Trump and his company had "repeatedly" violated state fraud law.
The ruling agreed with James' office that it is beyond dispute that Trump and his company provided banks with financial statements that misrepresented his wealth by as much as $3.6 billion. The judge wrote in his ruling that "the documents here clearly contain fraudulent valuations that defendants used in business".
Trump and his company were found to have violated New York's Martin Act and Executive Law § 63 (12). The Martin Act is a powerful anti-fraud law that gives the state's attorney general broad powers to investigate and prosecute cases of civil fraud. It does not require a victim, and traditional elements of fraud are eliminated. This means that the attorney general can bring a case against anyone who is suspected of engaging in fraudulent activity, even if there is no direct victim.
The Martin Act has been used by the New York Attorney General's Office in the past to prosecute other high-profile cases, and it is a key tool in their efforts to combat fraud and protect consumers. In the case of Trump and his company, the Martin Act was used to hold them accountable for their repeated misrepresentations of financial statements to lenders. This type of fraudulent activity is a serious offence and can result in significant penalties, including the dissolution of a business empire.
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Violating New York's Executive Law § 63(12)
Donald Trump and his company were found to have "repeatedly" violated New York's anti-fraud laws, specifically Executive Law § 63(12). This law gives the state's attorney general powers to investigate and prosecute cases of civil fraud.
The case against Trump was brought by New York Attorney General Letitia James, who argued that Trump and his company provided banks with financial statements that misrepresented his wealth by as much as $3.6 billion. Judge Arthur Engoron agreed with James' office, stating that "the documents here clearly contain fraudulent valuations that defendants used in business".
Trump has criticised the law, claiming that it is "very unfair" and does not require a victim or the traditional elements of fraud. He also alleged that it allowed a "politically elected partisan prosecutor to convince a politically elected judge" to pursue a case against him.
Executive Law § 63(12) has been used by the OAG in the past, including against two Trump businesses.
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Providing fraudulent valuations to banks
Donald Trump and his company have been found to have "repeatedly" violated state fraud law in New York. In his ruling, Judge Arthur Engoron agreed with the New York Attorney General Letitia James' office that it is beyond dispute that Trump and his company provided banks with financial statements that misrepresented his wealth by as much as $3.6 billion.
The ruling states that "the documents here clearly contain fraudulent valuations that defendants used in business". This refers to the practice of inflating and deflating the value of assets to pay lower taxes and receive better insurance coverage.
This practice is a violation of New York's powerful anti-fraud laws, including the Martin Act and Executive Law § 63(12). The latter law gives the state's attorney general powers to investigate and prosecute cases of civil fraud.
As a result of these findings, Trump could potentially have his sprawling real estate business empire ordered "dissolved", adding him to a short list of scam marketers and con artists who have been hit with the ultimate punishment for violating New York's anti-fraud laws.
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Frequently asked questions
New York's Martin Act and Executive Law § 63(12).
Trump and his company provided banks with financial statements that misrepresented his wealth by as much as $3.6 billion.
Trump could have his sprawling real estate business empire ordered "dissolved".
