Former President Donald Trump and his companies engaged in a widespread scheme to inflate the value of his real estate empire to boost his tax write-offs and get more favorable terms on loans and insurance coverage, according to allegations in a lawsuit filed Wednesday that accuses Trump and his family of fraud.
New York Attorney General Letitia James’ lawsuit against Trump, his companies, two company executives and three of his adult children — Ivanka, Donald Jr. and Eric — accusing them of systematically falsifying Trump’s balance sheets from 2011 through 2021, helping them reap more than $250 million in benefits that James is now seeking to force them to repay.
Along with the hefty financial penalty, the 222-page lawsuit seeks to impose significant business sanctions on the former president and The Trump Organization, his company, including a five-year ban on completing any real estate transactions in New York or obtaining loans from New York-chartered banks. James is also seeking an order permanently prohibiting Trump and his children from serving as an officer or director of any New York-based business.
The lawsuit is civil in nature, but James made clear she believes Trump and his co-defendants violated state and federal law, including bank and insurance fraud. She referred her findings to federal prosecutors and said she would also send them to the Manhattan District Attorney's Office upon request.
“We are filing a lawsuit against Donald Trump for violating the law as part of his efforts to generate profits for himself, his family, and his company,” James said, who accused Trump and his confidants of trying to “cheat the system, thereby cheating all of us.”
The Trumps, through various social media posts, accused James, a Democrat, of engaging in a political witch hunt against the Republican family. At one point, Trump, who is white, accused James, who is Black, of being “racist.”
"Attorney General Letitia 'Peekaboo' James, a total crime fighting disaster in New York, is spending all her time fighting for very powerful and well represented banks and insurance companies, who were fully paid, made a lot of money, and never had a complaint about me, instead of fighting murder and violent crime, which is killing New York State," the former president posted on Truth Social, his social-media platform.
James’ lawsuit is the culmination of a three-year investigation into Trump’s real estate holdings, which she launched in early 2019 after former Trump Organization attorney Michael Cohen testified before Congress and accused the then-president of intentionally inflating his assets.
The suit accuses Trump, his children and two Trump Organization employees — former CFO Allen Weisselberg and controller Jeffrey McConney — of systematically inflating Trump’s “statements of financial condition” by falsely claiming dozens of his properties were worth more than their actual value.
Among the properties cited in the lawsuit are some of Trump's signature assets, including his Trump Tower residence, his Mar-a-Lago Club, the Seven Springs estate in Westchester County and his Trump National Golf Clubs.
In one example, James highlighted Trump’s property at 40 Wall Street. According to the suit, the Trump Organization received appraisals in 2010 and 2012 that valued the property at $200 million and $220 million, respectively.
But on the balance sheet in 2011, Trump listed 40 Wall Street’s value at $524 million and $527 million in 2012. And his company allegedly used an inflated value to help get better terms on a loan from Ladder Capital Finance, where Weisselberg’s son worked, according to the lawsuit.
In another example, Trump’s triplex residence at Trump Tower in Manhattan was valued on the basis that it was 30,000 square feet, according to the lawsuit. In actuality, it’s about 11,000 square feet. On his statement of financial condition in 2015, Trump listed its value at about $327 million — or about $29,738 per square foot, based on the actual square footage.
The lawsuit claims that valuation was “absurd” because at that point, only one New York City apartment had ever sold for more than $100 million — and even then, the price was less than $10,000 a square foot.
“The number of grossly inflated asset values is staggering, affecting most if not all of the real estate holdings in any given year,” the lawsuit reads. “All told, Mr. Trump, the Trump Organization, and the other defendants, as part of a repeated pattern and common scheme, derived more than 200 false and misleading valuations of assets included in the 11 statements covering 2011 through 2021.”
James referred to Trump’s actions as the “the art of the steal,” a play on the title of his book, “The Art of the Deal.”
The lawsuit is a civil case, meaning it could result in financial penalties and sanctions against Trump and his businesses. But James repeatedly made clear she believes criminal conduct occurred. The case is separate from a pending criminal tax case against the Trump Organization, which is being led by the Manhattan district attorney’s office and previously led to a plea deal for Weisselberg. That case, which the attorney general’s office is assisting, is set to soon go to trial.
In a statement, Manhattan District Attorney Alvin Bragg said his office's criminal investigation of the Trump Organization is "active and ongoing."
Trump’s legal team tried to fight James’ investigation at various turns, battling with James in state court over subpoenas and depositions and in federal court in an attempt to block the investigation from moving forward at all. But so far, the courts have sided with James, including in a May ruling dismissing Trump’s federal suit. Trump’s appeal is pending.
In April, state Supreme Court Justice Arthur Engoron of Manhattan ruled Trump was in contempt of court for failing to comply with James’ subpoena. The judge ordered Trump to pay $10,000 a day before he lifted the order in June after Trump’s team submitted additional records.
In August, Trump sat for a six-hour deposition with James’ office in which he repeatedly invoked his Fifth Amendment right against self-incrimination.
Trump, a Republican, has repeatedly decried the investigation as a witch hunt, pointing to the Democratic attorney general’s numerous statements on the public record that have been critical of him. On Wednesday, his son, Eric, tweeted a video compilation of James' various comments about Trump, including one where she said she would be a "real pain in the ass."
"Letitia James is not working for the Attorney Generals office - she is working for the (Democratic National Committee)… 49 days before her election," Eric Trump posted on Twitter. James is facing a challenge on Nov. 8 from Republican Michael Henry, whom the former president supports.
In his federal lawsuit, Trump’s attorneys pointed to James’ tenure as New York City public advocate, when she once tweeted in 2017 that she had been “leading the resistance against Donald Trump in NYC and will only continue to do so in every possible way.” In 2018, when she was running for attorney general, James pledged to investigate Trump’s New York business, making it a central part of her successful campaign for office.
But Engoron waved off Trump’s complaints in a ruling allowing James’ subpoenas to proceed, arguing that James’ investigation was clearly triggered by Cohen’s testimony and wasn’t a means of harassing Trump. U.S. District Judge Brenda Sannes of Albany cited Engoron’s ruling when she dismissed Trump’s federal lawsuit, as well.
On Wednesday, James said she's pursuing Trump and his organization because their conduct was illegal.
"The statements of financial condition were greatly exaggerated, grossly inflated, objectively false, and therefore fraudulent and illegal," she said.