A judge’s recent ruling that former President Donald Trump committed fraud as he built his real-estate empire has dealt a significant blow to his image as a business titan. The ruling also carries potential consequences for the future of Trump’s marquee properties in his home state of New York.
The judge’s order, which rescinds business licenses as punishment, could make it difficult or even impossible for some of Trump’s companies to continue operating in New York, unless the decision is successfully appealed. Trump’s attorney has already vowed to appeal the ruling, describing it as “un-American” and part of a campaign to undermine his potential second bid for the presidency in 2024.
The case brought by the New York attorney general against Trump and his company alleges that they massively overvalued assets and deceived banks and insurers. The judge found that Trump’s financial statements created a “fantasy world” by inflating the value of his properties. For example, his Florida Mar-a-Lago estate was overvalued by as much as 2,300% on one financial statement. Additionally, Trump claimed that his Trump Tower penthouse apartment was nearly three times its actual size and worth $327 million, when in fact it was much smaller.
The judge concluded that these actions constituted fraud and rejected Trump’s argument that a disclaimer on the financial statements absolved him of any wrongdoing. As a result of the ruling, limited-liability companies that control some of Trump’s key properties, such as 40 Wall Street, will be dissolved, and control over their operations will be transferred to receivers. If this ruling holds, Trump would effectively lose the authority to make any decisions regarding these properties, including hiring and firing, renting office space, and taking on new loans.
Canceling business licenses is a significant order because operating without them is not possible. Lisa Renne Pomerantz, a lawyer in Bohemia, New York, explained that “their right to conduct business has been revoked,” and Trump has essentially lost control of these entities.
In addition to potential penalties of $250 million and remaining claims in a non-jury trial scheduled for October 2nd, the ruling on this count could have severe implications for the Trump Organization. Will Thomas, an assistant professor of business law at the University of Michigan, stated that “this is one of the worst outcomes you can get.” Unless successfully appealed, Thomas believes that the Trump Organization will inevitably lose control of properties such as 40 Wall Street, Trump Tower, and the Seven Springs estate outside New York City. Establishing new limited-liability companies in another state as a strategy seems implausible due to potential legal claims.
New York Attorney General Letitia James filed the civil lawsuit against Trump and his organization a year ago, accusing them of inflating asset values by billions of dollars. The lawsuit alleged that this was a routine practice in order to enrich themselves. The case was brought after Manhattan prosecutors declined to bring criminal charges for the same conduct.
Trump’s lawyers had requested that the case be dismissed, arguing that there was no evidence of harm to the public and that many of the allegations were barred by the statute of limitations. However, the judge rejected these arguments.
Following the ruling, Trump took to his social media platform, Truth Social, to express his disagreement with the decision. He insisted that his company had done a “magnificent job” and called the ruling “horrible and un-American.” Eric Trump also defended his father’s claims about the value of Mar-a-Lago.
The case is one of several legal challenges faced by Trump in recent months. He has been criminally indicted four times, including accusations of plotting to overturn the 2020 election, hoarding classified documents at Mar-a-Lago, and falsifying business records related to hush money payments. The Trump Organization was also fined $1.6 million for tax fraud in an unrelated case, and Trump has been sued by James’s office previously for misusing charitable funds.
In conclusion, the judge’s ruling that Trump committed fraud and the potential revocation of business licenses have tarnished Trump’s reputation as a business titan and may strip him of his authority over his properties in New York. The decision, if upheld, could have significant consequences for Trump’s future business endeavors. However, Trump has vowed to appeal the ruling and fight to maintain control over his properties. The legal battles surrounding Trump’s businesses continue to mount, adding to the challenges he faces as he considers a potential presidential run in 2024.