A New York judge has found Donald Trump and his adult sons liable for fraud and canceled the Trump Organization’s business certification, saying the Trumps provided false financial statements for roughly a decade.
Judge Arthur Engoron’s ruling came days before the civil case involving the New York attorney general’s office and the former president was set to go to trial.
Engoron granted Attorney General Letitia James’ motion for summary judgment, finding Trump, his sons, and others “to be liable as a matter of law for persistent violations” of New York state law. He found the financial statements the Trumps provided to lenders and insurers for about a decade to be false and said they repeatedly engaged in fraud.
The decision is a blow to Trump and a complete rejection of his arguments that he didn’t inflate the values of his golf courses, hotels, homes at Mar-a-Lago and Seven Springs on financial statements that were repeatedly used in business.
“Today, a judge ruled in our favor and found that Donald Trump and the Trump Organization engaged in years of financial fraud,” James said in a statement Tuesday night. “We look forward to presenting the rest of our case at trial.”
The attorney general has sought $250 million in damages, a ban on the Trumps from serving as officers of a business in New York, and to stop the company from engaging in business transaction for five years.
The judge canceled the business certifications of the Trump entities that are defendants in the case, including the Trump Organization, and said a receiver will be put in place to “manage the dissolution” of the corporate entities. There are two New York properties that are part of the lawsuit, the commercial tower at 40 Wall Street and the Trump family compound at Seven Springs.
However, the full breadth of his ruling remains unclear.
Questions remain as to how the receiver would dissolve the properties, if the ruling would impact properties located outside of New York state, including Mar-a-Lago, and if the Trumps could transfer the New York based assets into a new company located out of state.
Among other things, Trump is accused of inflating the value of his triplex apartment at Trump Tower by three times its size, resulting in an overvaluation of between $114 million to $207 million, Engoron wrote.
“A discrepancy of this order of magnified, by a real estate developer sizing up his own living space of decades, can only be considered fraud,” Engoron wrote.
“Exacerbating defendants’ obstreperous conduct is their continued reliance on bogus arguments, in papers and oral argument,” Engoron wrote. “In defendants’ world: rent regulated apartments are worth the same as unregulated apartments; restricted land is worth the same as unrestricted land; restrictions can evaporate into thin air; a disclaimer by one party casting responsibility on another party exonerates the other party’s lies …”
The judge added: “That is a fantasy world, not the real world.”
The state supreme court judge likened the Trumps’ legal defense of his fraudulent financial statements to a Chico Marx line in the comedy “Duck Soup”: “Well, who ya gonna believe, me or your own eyes?”
Trump’s attorney Christopher Kise called the ruling “completely disconnected from the facts and governing law.”
He added: “While the full impact of the decision remains unclear, what is clear is that President Trump and his family will seek all available appellate remedies to rectify this miscarriage of justice.”
In a statement on X, the platform formerly known as Twitter, Eric Trump said: “Today, I lost all faith in the New York legal system. Never before have I seen such hatred toward one person by a judge – a coordinated effort with the Attorney General to destroy a man’s life, company and accomplishments. We have run an exceptional company – never missing a loan payment, making banks hundreds of millions of dollars, developing some of the most iconic assets in the world. Yet today, the persecution of our family continues…”
James has alleged that Trump, three of his children, his companies and his business executives defrauded lenders, insurers and other entities. (An appeals court dismissed Trump’s eldest daughter, Ivanka, as a co-defendant from the case in June.)
In the lawsuit, James claims that Trump reaped a “substantial” financial benefit by putting forward faulty information in his financial statements, including $150 million in the form of favorable interest rates he obtained from the banks that the attorney general said his team misled.
In the order, the judge rejected Trump’s deposition testimony in which the former president said that the financial statements were not fraudulent because they contained disclaimers. Trump said the statements contained a “worthless clause” in them warning lenders and others that they shouldn’t be relied on.
Tuesday, the judge said that “the defendants’ reliance on these ‘worthless’ disclaimers is worthless.”
The ruling means the attorney general’s office won on its first claim and will receive some amount of disgorgement to be determined at trial. The case will still proceed to trial but the attorney general’s office won’t need to prove the financial statements are false as they seek to hold him and his sons liable for insurance fraud and false business records.
The trial’s start date remains in limbo.
Earlier this month, Trump filed a petition with the state appeals court to force Engoron to implement an appeals court decision in June that said certain claims may be moot because they fell outside of the statute of limitations. The appeals court left it up to Engoron to decide.
A judge on the appeals court paused the start of the trial, scheduled for Monday, to allow a larger panel of appellate judges to weigh in. A decision on that issue is expected to come this week.
CORRECTION: A previous version of this story misstated the number of claims on which the judge ruled Tuesday. He ruled on one claim from the attorney general’s office. This story has also been updated with additional developments.