New York Attorney General Letitia James on Wednesday filed a civil fraud lawsuit against former President Donald Trump, three of his adult children, and other senior members of the Trump Organization.
The lawsuit — which alleges business and insurance fraud as well as conspiracy — marks the culmination of a three-year investigation into Trump and his business.
“I am announcing that today we are filing a lawsuit against Donald Trump as part of his efforts to generate profits for himself, his company, and his family,” James said Wednesday, claiming that the defendants grossly inflated the former president's personal net worth to the tune of billions of dollars.
James alleges that for about a decade from 2011 to 2021, Trump and the other defendants fraudulently misstated the value of Trump Organization holdings to evade taxes and secure favorable loans. The alleged scheme, James said, centers on annual statements that Trump and his trustees certified to attest to the valuations.
The suit names Ivanka Trump as well as Donald Trump Jr. and Eric Trump; the two sons serve as senior executives at the Trump Organization.
"The statements were personally certified as accurate by Mr. Trump or by one of his trustees when being presented to financial institutions with the purpose and intent that the information contained in the statement would be relied upon by those institutions," James said in a press release.
The Trump Organization violated New York laws by manipulating asset values and, in the process, the defendants “cheated all of us,” James says. In addition to the civil claims, she said she would refer additional criminal charges to relevant authorities.
Donald Trump has repeatedly said the investigation is politically motivated and that James, who is Black, is racist. He repeated the charges Wednesday afternoon in a post on his Truth Social site. saying that James was only bringing charges due to "her really bad poll numbers."
A three-year investigation
The latest legal setback for the former president comes amid a swirl of investigations into Trump, but the probe by James has gone most directly after Trump’s bottom line.
In some instances, the complaint says, Trump overvalued his real estate properties. For example, Trump reported that his own condo at Manhattan's Trump Tower was 30,000 square feet when in fact it was 11,000 square feet, according to the complaint. Trump's valuation of the property in 2015 of $327 million, the lawsuit says, rested on "objectively false numbers."
In recent days, James and her team rejected a settlement offer from Trump’s team, The New York Times reported. Her team questioned Trump directly in August, prompting the former president to Trump invoke the Fifth Amendment more than 440 times that day.
Answering a question from reporters on Wednesday, James didn't take another new settlement off the table but said she didn't want to "negotiate in public."
The investigation focused on the claim that Trump undervalued his properties when reporting taxes to the IRS, but then overvalued those same properties when it came time to use them as collateral in bank loans. In a court filing last January, James’s office said it “has developed significant additional evidence indicating that the Trump Organization used fraudulent or misleading asset valuations to obtain a host of economic benefits, including loans, insurance coverage, and tax deductions.”
James is seeking to permanently bar the family from serving in officer or director positions in any corporation or business licensed in New York State. The attorney general also seeks to bar the former president and the Trump Organization from entering into any New York real estate acquisitions for 5 years, and to claw back all financial benefits obtained through the allegedly fraudulent practices, estimated to total $250 million.
According to the complaint, the defendants violated New York State laws targeting executive fraud, including falsification of business, financial, and insurance records, and conspiracy.
Alexis Keenan is a legal reporter for Yahoo Finance. Ben Werschkul is a Washington correspondent for Yahoo Finance.