What does it mean for Trump to be found guilty of fraud?

New York State Judge in Manhattan Arthur Engoron admitted former US President Donald Trump and his sons Eric and Donald and former Trump Organization chief financial officer Allen Weisselberg are guilty of fraud in a civil suit by prosecutor Letitia James. The 35-page ruling notes that the former president overstated the value of his assets by billions of dollars when filing financial statements with banks and insurance companies.

As a result, James now has the right to ask the court to revoke all business licenses issued to the Trump Organization, which would significantly limit its operations and could lead to its closure. She could also face a $250 million fine, and Trump himself could be permanently banned from doing business in the state. Further consideration of the claim is scheduled for October 2.

Now the court has come to the conclusion that Trump significantly overestimated his assets and exaggerated his net worth when preparing documents in order to obtain better conditions in real estate transactions. Other charges include falsification of corporate records and provision of false data.

New York State Attorney General Letitia James filed a civil lawsuit against Trump for fraud and misleading government officials on September 21, 2022. It alleged that the Trump Organization violated the law in preparing annual reports on Trump’s financial condition from 2011 to 2021. “With the help of his children and top Trump Organization executives, Donald Trump falsely inflated his net worth by billions of dollars in order to unfairly enrich himself and defraud the system,” James said.

In particular, the value of the Mar-a-Lago estate in Florida was inflated (in one report it was estimated at $612.1 million instead of the maximum market value of $27.6 million), the price and area of ​​the penthouse in Trump Tower in Manhattan (Trump’s was valued at $327 million is three times the reasonable estimate), as well as office buildings and golf courses. In total, the defendants overvalued their assets by $812 million to $2.2 billion. “Discrepancies of this order on the part of the developer can only be considered fraud,” the judge noted. According to The New York Times, the former president may now lose control of his commercial real estate on Wall Street, in Lower Manhattan, over the family estate in Westchester County, as well as Trump Tower and a golf club in Westchester.

In addition, the prosecutor’s request to impose sanctions against five Trump lawyers for putting forward arguments in court that were rejected during the investigation was granted. They received $7,500 fines because their arguments were “completely unfounded.”

During the investigation, Trump said that there was nothing wrong with the overvaluation of his real estate in certain years, since then its value still grew, and he could find “buyers from Saudi Arabia” who would agree to pay above market prices.

After the court’s decision, Trump called the verdict politically motivated and said that he plans to appeal it. “This is an attempt to seriously damage the candidate from the leading opposition party. Nothing like this has ever happened in our country. My civil rights were violated and any appellate court, federal or state, should overturn this horribly un-American decision. If they can do it to me, they can do it to you!” – he wrote on the social network TruthSocial.

Five more cases are currently being investigated against Trump, four of which are criminal.

The essence of the fraud case is precisely that when Trump had to pay taxes, his organizations and managers, one of whom was himself, underestimated the value of real estate and its condition, US lawyer Igor Slabykh explained to Vedomosti. When it was necessary to get loans, they overestimated the area and quality, the expert continues. Both parties filed requests for a so-called summary judgment before the start of the trial, which means that the case does not need to be considered on the merits, because the parties do not have a dispute regarding the factual circumstances, and the court does not need to question witnesses to establish them – everything is established in the case and It is enough for the court to familiarize itself with the documents, the lawyer explains.

The summary judgment hearing was held last week, and today the judge made a decision refusing to dismiss the case from the defendants – they insisted that the documents showed that there was no violation or fraud. The judge also considered the prosecutor’s request and partially agreed with it on one of the grounds of the claim that the defendants committed “civil fraud” by distorting and manipulating prices, that is, the claim was partially satisfied, says Slabykh.

“Further on this claim there are other claims that will be considered, since the available documents are still not enough for a decision. In essence, the judge agreed with the main demand of the prosecutor’s office. Trump and other defendants in this case face no criminal penalties other than damages and the potential liquidation of the Trump Organization,” the lawyer believes.

A New York court has ruled that Trump and other defendants, including his sons, are liable for fraud in connection with providing false information when filing returns with financial institutions, says Kira Vinokurova, co-head of Pen & Paper’s sanctions and compliance practice. Despite the use of the term “fraud,” the charges in this case are civil in nature and, unlike criminal cases, will not result in either a criminal record or imprisonment, Vinokurova said. At the same time, the legal recognition of Trump as a fraudster could be a reputational blow for him, because his election campaign is based, among other things, on the success of his business empire, which, apparently, could have been greatly exaggerated, the lawyer explains.

It is obvious that Trump and his team will try to challenge the court’s findings, Vinokurova adds. So far, these conclusions have been made in the form of a so-called summary judgment (summary judgment) and the court has yet to consider the charges on other counts, the lawyer notes. In a worst-case scenario, Trump could be ordered to pay damages in the amount of $250 million and suspended from working at the Trump Organization.

“The company may also have its licenses to conduct a number of business operations and other corporate permits permanently revoked. Accordingly, although the issue of liquidating the Trump Organization is not formally considered within the framework of this case, its future fate is actually being decided,” Vinokurova concludes.