Trump Organization continuing 'fraudulent' practices after lawsuit, says New York AG
The AG is seeking to keep Trump from evading liability posed by the $250M suit.
New York Attorney General Letitia James is seeking a preliminary injunction as part of her $250 million civil lawsuit against former President Donald Trump to stop what she says is his ongoing fraudulent conduct.
On the same day last month that James filed the lawsuit accusing Trump, his three eldest children, and two corporate executives of "staggering" fraud that she claims "grossly inflated" Trump's net worth, the Trump Organization quietly registered a new entity, Trump Organization II, according to a new court filing Thursday.
Investigators suspect that Trump could move assets from his family real estate business to the new entity in an attempt to evade liability posed by the lawsuit, according to the attorney general's motion for a preliminary injunction.
"[T]he Trump Organization now appears to be taking steps to restructure its business to avoid existing responsibilities under New York law," the filing said.
Thursday's filing also made clear James is concerned that Trump and the other defendants could be using the same alleged "fraud and misrepresentation" as they prepare Trump's financial statements for the current year. For example, the filing claims that Trumps' current valuation for his Mar-a-Lago estate still does not account for restrictions on the use of the property, and that Trump continues to treat $93 million held in a partnership with Vornado Realty Trust as his own cash.
"Indeed, in many areas, the Trump Organization has continued using practices they knew to be improper or fraudulent," the motion said.
Trump's attorney, Alina Habba, called the filing "nothing more than a thinly-veiled attempt to keep this case with Justice Engoron rather than have it transferred to the Commercial Division where it belongs."
"We have repeatedly provided assurance, in writing, that the Trump Organization has no intention of doing anything improper," Habba said in a statement. "This is simply another stunt which Ms. James hopes will aid her failing political campaign."
James is also seeking the appointment of an independent monitor to oversee the Trump Organization's submission of financial information to accountants, lenders and insurers, "to enjoin Defendants from transferring to non-party affiliates or otherwise disposing of assets without Court approval," the filing said.
"Our investigation uncovered the fact that Donald Trump and the Trump Organization engaged in significant fraud to inflate his personal net worth by billions of dollars to illegally enrich himself and cheat the system," James said in a statement Thursday. "Since we filed this sweeping lawsuit last month, Donald Trump and the Trump Organization have continued those same fraudulent practices and taken measures to evade responsibility. Today, we are seeking an immediate stop to these actions because Mr. Trump should not get to play by different rules."
The Trump Organization did not immediately respond to James' newest filing. Trump has denied wrongdoing and has called James' 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.
The lawsuit accused them of engaging in "numerous acts of fraud and misrepresentation in the preparation of Mr. Trump's annual statements of financial condition" that overstated the values of nearly every major property in the Trump portfolio over at least a ten-year period.
"These acts of fraud and misrepresentation grossly inflated Mr. Trump's personal net worth as reported in the Statements by billions of dollars and conveyed false and misleading impressions to financial counterparties about how the Statements were prepared," the lawsuit said.
"Mr. Trump and the Trump Organization used these false and misleading Statements repeatedly and persistently to induce banks to lend money to the Trump Organization on more favorable terms than would otherwise have been available to the company, to satisfy continuing loan covenants, and to induce insurers to provide insurance coverage for higher limits and at lower premiums," said the suit.
In Thursday's motion, James said that nearly a month after she filed her suit, the former president and his son Eric have refused to accept service of the lawsuit. She sought permission to serve them electronically.
The motion also asked for a court conference to set a trial date for early October 2023.
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