MICHAEL R. SISAK and LARRY NEUMEISTER
NEW YORK (AP) — New York’s attorney general sued former President Donald Trump and his company on Wednesday, accusing them of defrauding some of their most valuable assets, including properties in Manhattan, Chicago and Washington, D.C. .
Attorney General Leticia James’ lawsuit, filed in New York state court, is the culmination of a three-year civil investigation by a Democrat into Trump and the Trump Organization. Trump’s three grown children, Donald Jr., Ivanka and Eric Trump, were also named as defendants, along with two longtime campaign executives, Allen Weiselberg and Jeffrey McConney.
The lawsuit aims to cut to the heart of what made Trump famous, casting a dark light on the image of wealth and opulence he has maintained throughout his career — first as a real estate developer, then as the host of a reality show in ” Apprentice” and “Celebrity Apprentice”, and then as president.
James, a Democrat, announced details of the lawsuit at a news conference Wednesday. The case appeared in court records Wednesday morning.
James said Trump “falsely inflated his net worth by billions of dollars.”
The attorney general’s office said the goal was to improve Trump’s image as a billionaire and the value of his assets when it gave him an advantage, while at other times the value of assets was reduced for tax purposes.
“This investigation has shown that Donald Trump engaged in illegal behavior for years to inflate his wealth, to defraud the banks and the people of the great state of New York,” James said at a press conference. “Claiming that you have money that you don’t is not the art of the deal. This is the art of stealing.”
James is seeking to remove the Trumps from businesses involved in the alleged fraud and wants an independent monitor appointed for at least five years to oversee the Trump Organization’s compliance, financial reporting, valuations and disclosures to creditors, insurers and tax authorities.
It seeks to replace the current trustees of Trump’s revoked trust, which oversees his business interests, with independent trustees to bar Trump and the Trump Organization from purchasing commercial real estate for five years, from taking loans from New York banks for five years, and permanently ban Trump and the three his children of legal age to serve as an officer or director of any New York corporation or similar business entity incorporated and/or licensed in the State of New York.
It also seeks to permanently enjoin Weiselberg and McConey from acting as financial supervisors of any New York corporation or similar business entity incorporated and/or licensed in the State of New York.
James said her investigation revealed potential criminal wrongdoing, including falsifying commercial records, issuing false financial statements, insurance fraud, conspiracy and bank fraud. She said her office is forwarding those findings to federal prosecutors and the Internal Revenue Service.
Alina Hubba, Trump’s attorney, said the lawsuit “is not focused on fact or law — rather, it is focused solely on advancing the attorney general’s political agenda.”
“It is abundantly clear that the Attorney General’s Office exceeded its legal authority by prying into transactions where there was no wrongdoing,” Habba said. “We are confident that our judicial system will not stand for this unchecked abuse of power, and we look forward to defending our client against any and all of the attorney general’s baseless demands.”
James’ lawsuit comes amid unprecedented legal challenges for the former president, including an FBI investigation into Trump’s handling of classified documents and an investigation into his efforts to overturn the 2020 election.
The Trump Organization is scheduled to stand trial in October on criminal charges that it planned to dole out tax-free perks to top executives, including its longtime chief financial officer, Weiselberg, who alone received more than $1.7 million in extras.
Weiselberg, 75, pleaded guilty on August 18. His plea agreement requires him to testify at the company’s trial before he begins a five-month prison term. If the organization is found guilty, Trump may face a fine of twice the amount of unpaid taxes.
Manhattan District Attorney Alvin Bragg led a parallel criminal investigation into the same business practices that underlie James’ civil suit. That investigation lost momentum earlier this year after Bragg raised internal questions about whether the criminal case was viable, but the Democrat said it had not been abandoned.
Meanwhile, the FBI continues to investigate Trump’s storage of confidential government documents at his Mar-a-Lago estate in Florida, and a special grand jury in Georgia is investigating whether Trump and others tried to influence state election officials.
The legal drama is unfolding ahead of November’s midterm elections, in which Republicans are trying to win control of one or both houses of Congress.
Trump, meanwhile, laid the groundwork for a potential comeback campaign in 2024 and accused President Joe Biden’s administration of targeting him to hurt his political chances.
State law allows for a wide range of civil remedies against companies that commit commercial fraud, including revoking state business licenses, firing company officers, and ordering restitution or recovery of ill-gotten gains.
James’ office could also bar Trump from participating in certain types of business, as happened in January when a judge banned former pharmaceutical company CEO Martin Shkreli from working in the pharmaceutical industry for life.
In a previous clash with Trump, James oversaw the shutdown of his charity, the Trump Foundation, after her predecessor in the attorney general’s office, Barbara Underwood, sued, alleging he misused its assets to settle business disputes and boost his candidacy against White. House. A judge ordered Trump to pay $2 million to a number of charities to settle the case.
James, who campaigned as a Trump critic and observer, began scrutinizing his business practices in March 2019 after his former personal attorney, Michael Cohen, testified to Congress that Trump had exaggerated his wealth in financial statements provided to Deutsche Bank , when he was trying to get financing to buy the NFL’s Buffalo Bills.
Since then, James’ office and Trump’s lawyers have repeatedly clashed over the direction of the investigation and Trump’s reluctance to comply with subpoenas for testimony and records. Trump spent months fighting the subpoena that led to his impeachment in August, after his lawyers failed to convince the courts that he should be excused from testifying because his answers could be used in the criminal investigation of Bragg.
Trump paid a $110,000 fine in May after he was charged with contempt of court for being slow to respond to a subpoena James’ office issued seeking documents and other evidence. The contempt ruling was lifted in June after Trump and his lawyers filed documents showing they made a good faith effort to locate the relevant documents.