Trump Made a Fortune Inflating His Assets, NY Tells Court
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(Bloomberg) -- Donald Trump wanted to get higher on the Forbes billionaires list and save a fortune on loan terms by overvaluing his properties, according to evidence that a lawyer for New York Attorney General Letitia James previewed for a packed courtroom at the former president’s civil fraud trial.
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Clips of sworn testimony by Trump Organization officials and emails with the Trump family’s bankers were featured in the state’s opening statement Monday as New York argued that the company falsified asset values to get better terms from Deutsche Bank AG and others.
Trump, 77, sat at the defense table in the Manhattan courtroom flanked by a team of lawyers. He watched on a computer monitor as the state played a past clip of his former lawyer Michael Cohen testifying that the disputed assets were often valued more to get Trump “higher on the Forbes list,” apparently to suggest a tendency to exaggerate his wealth. The numbers were made up, Cohen said.
“It was basically the number that Mr. Trump wanted,” Cohen said in the clip.
James claims that Trump and his company used false asset valuations to inflate his wealth by billions of dollars a year from 2011 to 2021. He is also accused of using false valuations to get cheaper insurance policies. All told, Trump allegedly reaped $250 million in illegal profit.
State Supreme Court Justice Arthur Engoron has already found Trump liable for fraud. The trial will now focus on six remaining claims and the amount of damages owed. It will help determine the fate of Trump’s real estate empire in New York and marks the first of a slew of others, including four criminal trials, that lie ahead even as Trump runs in the 2024 presidential election.
At the end of the court proceeding Monday, Engoron hinted he may have concerns that the statute of limitations may have run out on some of the claims and asked the attorney general’s lawyers if they can link the evidence about Trump’s misrepresentations in 2011 to affecting lenders in 2014.
Deputy Attorney General Kevin Wallace assured the judge the link would be made.
Trump, who wore a blue suit and blue tie, took a seat at the defense table, with his arms crossed throughout the attorney general’s opening statement. Trump’s son Eric was seated behind his father in the public section of the courtroom. Both Eric and Donald Trump Jr. are also defendants in the case. James was also present, seated in the first row behind her trial team.
It was the first time Trump and James found themselves together in a courtroom at a trial over a lawsuit the attorney general brought against him.
No Victims
In his opening, Trump’s lawyer said the evidence at trial will show that the claims involve only successful and profitable loan transactions with no victims, and that the banks that lent him the money made more than $100 million in interest.
“President Trump has made billions of dollars building up one of the most successful business empires in the world,” Chris Kise said.
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Kise said Deutsche Bank officers will testify that they conducted independent risk analysis and didn’t rely on Trump’s statements of financial condition, and that valuation disparities aren’t considered by the bank to be fraudulent. They’ll also testify that Trump was “overqualified” to do business with them, Kise said.
Trump hunched forward and peered at a computer monitor as he studied a May 10, 2016, statement his company submitted to Deutsche Bank, which Kise said was “negotiated by top-tier counsel.” Trump’s familiar signature in black Sharpie was plainly visible on the document.
‘Different Conclusions’
Kise read from one of Trump’s disclaimers: “Users of this financial statement should recognize that they might reach different conclusions.” He pointed to a 2014 Deutsche Bank document showing that the bank continued with a loan even after coming up with a valuation that was $2 billion lower than Trump’s. These differences are the “heart and soul of commercial real estate lending,” Kise said.
Alina Habba, another lawyer for Trump, warned in her opening of what she called the dangers of the case.
“These are sophisticated banks,” she said, pointing to the $100 million the defense says the banks made, and said of James: “The AG is setting a very dangerous precedent for business owners in New York.”
As he left at a break, Trump told reporters outside the courtroom that the judge should be “disbarred.”
“This is a judge who should be out of office,” he said. “This is a judge who some people think could be charged criminally for what he’s doing.”
First of Many Trials
Trump faces at least one other civil trial next year, as well as trials in four prosecutions accusing him of a wide variety of criminal conduct, from mishandling classified documents to trying to overturn the result of the 2020 election. The Republican front-runner in the presidential race has denied wrongdoing and claims all the cases are an effort to undermine his bid to return to the White House.
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Speaking to reporters outside the courtroom ahead of the trial, Trump called the case “a continuation of the single greatest witch hunt of all time.” He said his actual net worth was “substantially more” than what he put on his annual statements of financial condition.
Engoron scheduled the New York trial to last until Dec. 22. Trump will testify toward the end of the trial, according to a list of witnesses.
Fraud Finding
Last week the judge granted New York’s request to hold Trump liable on the fraud claim, concluding that the evidence of his use of false and misleading asset valuations was so strong that a trial on that allegation wasn’t necessary.
Read More: Trump’s Business Empire at Risk of Dissolution After Ruling
The trial will also determine penalties. The attorney general seeks $250 million in restitution and a ban on Trump and the other defendants, including Donald Jr. and Eric, from serving as officers of any New York-based company, as well as other penalties.
The judge’s earlier ruling required the cancellation of certificates for companies that hold those assets, a process that will be overseen by a court-approved receiver. The Trump Organization is made up of some 500 entities, and the scope and impact of Engoron’s order remain unclear.
The case is New York v. Trump, 452564/2022, New York State Supreme Court (Manhattan).
--With assistance from Laura Nahmias.
(Updates with Engoron’s concern on statute of limitations in seventh paragraph.)
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