New York State Attorney General Letitia James says the Trump Organization engaged in “fraudulent or misleading” practices as it repeatedly misrepresented the value of its assets.
James set out the possible fraud in a response to Donald Trump’s effort to prevent questioning of him or his children Ivanka and Donald Jr. in a civil investigation.
The filing was the first specific citation by James’ office of the offenses by Trump’s business. It set out misleading statement about the value of six Trump properties, including golf resorts in Scotland and Westchester County, New York and skyscrapers such as Trump Tower and 40 Wall Street in Manhattan.
The value of the properties was inflated to lenders for better rates for loans, to insurers for higher claims for losses, and to the Internal Revenue Service for more extensive tax deductions.
In early December, James issued the subpoenas for Trump and his children. The Attorney General questioned Trump’s son Eric in October 2020.
Trump lawyers filed a federal lawsuit to halt the investigation and to bar her office from participating in a criminal inquiry by the Manhattan District Attorney. They also filed court papers specifically seeking to block subpoenas.
Years of Fraud?
James opened the civil investigation in March 2019, weeks after Trump’s former lawyer and fixer Michael Cohen testified in a Congressional hearing about extensive fraud in the Trump Organization. In May 2021, the Attorney General’s office joined the criminal inquiry of the Manhattan District Attorney’s office.
Allen Weisselberg, the Trump Organization’s Chief Financial Officer, was indicted in July on charges of grand larceny and tax fraud over avoidance of $900,000 of taxes on $1.76 million in unreported perquisites — including leased Mercedes-Benzes, bonuses, a rent-free apartment, and school tuition for two relatives — and improper receipt of $133,000 in state and local tax refunds. He faces more than 10 years in prison if convicted.
The Trump Organization was indicted at the same time over a 15-year tax evasion scheme.
Tuesday’s filing detailed “frequent use of misleading asset valuations in order to obtain financial benefits.” A 2015 Trump statement of financial condition estimated that the 40 Wall Street tower was worth $735 million, rather than the $257 million assessment by one lender.
The Attorney General’s office said Trump submitted at least two misleading statements to the Internal Revenue Service, inflating the value of land at both his Seven Springs Estate in Westchester County by including the $61 million value of seven non-existent mansions. Trump also overstated the value of his Los Angeles Golf Club.
Trump even misled about the size of his home in Trump Tower. He claimed since 2012 that the triplex penthouse is 30,000 square feet, while signing documents that the actual size is 10,996 square feet. The inflation was part of a claimed $327 million value for the apartment. James noted that the Trump Organization’s Weisselberg said, in questioning by investigators, that the figure was inflated by “give or take” $200 million.
Trump avoided federal income tax for 10 of 15 years, including the entire period from 2010 to 2014, before becoming President. In his first year in the White House, he paid only $750.