The future of Donald Trump’s New York real estate business will be decided in a Manhattan court case that began on Monday.
The New York attorney general, Letitia James, is taking Trump to court after a three-year investigation found that he and others within the Trump Organization repeatedly used false or misleading financial statements to broker deals, obtain favorable loans and bolster the appearance of his net worth.
The judge presiding over the trial, the New York supreme court justice Arthur Engoron, already found Trump guilty of financial fraud in a pre-trial judgment. The trial will be dedicated to determining whether, and how much, Trump will have to pay for the verdict.
James has argued that the Trump Organization should owe at least $250m for profiting off loans that were awarded based on false and misleading financial statements. Trump’s lawyers have appealed the judgment, though it is unlikely to affect the trial’s proceedings.
Here’s what we know about Trump’s fraud trial.
What is Trump on trial for?
James is suing Trump for creating false and misleading financial statements that inflated the value of various assets. Prosecutors found fraudulent reporting for 23 Trump Organization properties and assets from 2011 to 2021.
For example, Trump in 2015 said that his triplex apartment in Trump Tower was worth $327m, reporting that the property was 30,000 sq ft. The attorney general called this claim “absurd” given that the apartment was actually under 11,000 sq ft and that, at that point, “only one apartment in New York City ever sold for even $100m”.
Trump also said that his Wall Street office building, 40 Wall Street, was valued at $530m. Independent professional appraisers calculated a valuation that was less than half that. Twelve rent-stabilized units in Trump’s Park Avenue condo were in 2010 estimated to be valued at around $750,000. In 2012, the Trump Organization said those same apartments were worth $50m.
The financial statements made Trump’s net worth appear $850m to $2.2bn higher than it actually was, the attorney general argued.
What was the judge’s pre-trial ruling?
On 26 September Engoron dealt a heavy blow to Trump when he issued a pre-trial judgment ruling that Trump committed financial fraud. In his ruling, Engoron said documents submitted as evidence clearly showed Trump repeatedly used fabricated financial statements to artificially increase the value of his assets. Trump, he wrote, was operating in a “fantasy world, not a real world”.
What is the impact of the judge’s pre-trial ruling?
As punishment, Engoron canceled the business certificates of Trump and other defendants, including his sons Donald Trump Jr and Eric Trump, along with those belonging to Trump’s companies. This rare and dramatic step will make it nearly impossible for the Trumps to run their real estate business in New York.
It is unclear exactly what this will mean for the future of the Trump Organization, especially for its New York properties, including Trump Tower and the Trump International Hotel & Tower. The future of the family business will be determined by how much Engoron decides the Trumps will have to pay in monetary damages. If the business is slapped with a hefty fine, it is likely Trump will have to sell off at least some of his properties to pay it off.
Will the Trumps appear in court?
Trump, who has maintained that the case is a “witch hunt” and called Engoron on social media “deranged”, attended the New York trial on Monday.
Trump and three of his children, Donald Trump Jr, Eric Trump and Ivanka Trump, all have been put on a list of potential witnesses. That does not mean they will be called to testify, and they can choose not to show up, though the judge can use that against them when deciding the case.
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Other people who could make appearances as witnesses include Michael Cohen, Trump’s former lawyer who served three years in prison for tax evasion. Cohen told Congress in 2019 that Trump had lied about his net worth in financial statements, eventually sparking James’s investigation into Trump. Allen Weisselberg, the Trump Organization’s chief financial officer who was sentenced to five months in prison for fraud, could also be called to testify.
Will there be a jury?
Because this is a bench trial, there will be no jury on the case. Engoron will be the sole decider of the verdict.
What happens if Trump is found guilty?
Because this is a civil trial, Trump will not be sent to prison for his crimes. Trump has technically already been found guilty by the judge in a pre-trial judgment. What’s up in the air is exactly how much Trump will have to pay for committing fraud.
The attorney general is trying to get disgorgement of profits, or taking back the profits Trump made off his false financial statements. The statements were sent to banks and other lenders who helped the company purchase properties including Trump’s golf club in Miami, the Trump International Hotel & Tower in Chicago and the Old Post Office building in Washington.
The attorney general is arguing that the Trump Organization should have a disgorgement of at least $250m.
How long will the trial last?
The judge has scheduled the trial to go until 22 December, but because Engoron already issued a major pre-trial ruling, it will likely take much less time.
This article was amended on 2 October 2023 to correct the amount the units in Trump’s Park Avenue condo were valued at in 2010 and to clarify the year Cohen told Congress that Trump had lied about his net worth.
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