A New York judge ruled on Tuesday that Donald Trump committed financial fraud by overstating the value of his assets to broker deals and obtain financing.
The ruling is an acceleration of the case that the New York attorney general, Letitia James, has been building against Trump since 2019, that the former president fudged financial statements and inflated his net worth up to $2.2bn more than the actual figure.
In a dramatic step just days before the trial is set to start, New York supreme court justice Arthur Engoron issued a partial ruling largely agreeing with James. He also ordered the cancellation of New York business certificates of all companies related to Trump and his two sons, Donald Trump Jr and Eric Trump, making it difficult for Trump to continue running his real estate business in the state.
A trial is still set to start 2 October, in which Engoron will decide whether Trump, his allies and his companies will have to pay the $250m in monetary damages James is asking for. Trump’s lawyers say they will appeal the judge’s ruling.
Here are five takeaways from Tuesday’s ruling:
1. A big win for Letitia James
Though the trial is technically not over, the ruling is a huge win for the New York attorney general, who started her investigation into the Trump Organization in 2019.
Over three years, her office interviewed 65 witnesses and reviewed “millions of pages of documents”. Trump was ultimately fined $110,000 for not complying with subpoenas for documents. When he eventually sat for a deposition, Trump told James that “the whole case is crazy” and that he created “the hottest brand in the world”.
The former president tried to sue James after she filed her lawsuit in September 2022, but Trump ended up dropping his lawsuit earlier this year. Trump has denied wrongdoing and has called the case a “witch-hunt”.
2. A bench trial will still take place, but it will be shorter
Engoron initially scheduled the trial to go from 2 October to 22 December. But his judgement on Tuesday will dramatically shorten the trial since he already ruled in agreement with James’s main case against Trump: that he and his allies wrote up “false and misleading” financial statements and that they used these doctored financial statements to conduct business transactions.
It is unclear how much shorter the trial will be after the ruling. It is a bench trial, meaning there will be no jury and the case will be decided solely by the judge.
3. Doing business in New York will be difficult for Trump, and his company could still face a $250m fine
Engoron ruled that the New York business certificates of the Trump Organization and other Trump subsidiaries listed in the suit will be cancelled. Certificates of companies owned by the named defendants, including Trump and his two sons, Donald Trump Jr and Eric Trump, will also be cancelled.
The impact of this is still unclear, though it does not bode well for the Trump Organization, which has multiple major real estate holdings in New York City.
This means that his companies can no longer hold certificates that make them incorporated or set up as limited liability companies (LLCs) in the state. Engoron gave the Trumps 10 days to name three people who can oversee the dissolution of existing incorporated companies and LLCs in the Trumps’ name, including the Trump Organization.
James also asked Engoron to rule on monetary damages of up to $250m, which is how much the attorney general’s office believes the Trump Organization gained by issuing false and misleading financial statements. Engoron could also permanently bar Trump and his sons from serving as officers, which includes C-suite executive roles, of New York-based companies and place a five-year ban on any real estate acquisitions.
4. Trump is a real estate ‘genius’ only in a ‘fantasy world’
In pre-trial hearings before the ruling, Trump lawyer Christopher Kise told the judge that the former president is “an investment genius” and “probably one of the most successful real estate developers in the country”.
“President Trump is a master at finding value where others see nothing,” Kise told Engoron.
In his ruling, it is clear that Engoron sees things differently.
“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,” Engoron wrote.
“This is a fantasy world, not a real world.”
5. The ruling is just another legal woe that is teed up for Trump
Trump has been actively campaigning for the 2024 presidential election and is leading the polls among his peers in the Republican primaries. But his campaign may be interrupted by more trials set to take place next year in New York, Washington DC and Florida.
In January, Trump will be facing another trial around accusations of defamation from writer E Jean Carroll. Carroll is seeking damages of $10m. Trump has two trials scheduled for March: one around hush-money payments made to Stormy Daniels and a second in Washington around the January 6 Capitol insurrection. Then in May, Trump will have a trial in Florida for the withholding of classified documents at his Mar-a-Lago estate. Another trial over election meddling in Georgia has yet to be scheduled.
As much of a setback as Tuesday’s ruling may be for the former president, this may only be the beginning.
