On Wednesday, New York State Attorney General Letitia James, a Democrat, announced that her office would be filing a civil lawsuit against former President Donald Trump, his three eldest children, and the Trump Organization, after a wide-ranging three-year investigation.
In a filing that she said comprises 23 "assets," including various New York real estate properties, James claims that the Trump family "violated several state criminal laws, including falsifying business records, issuing false financial statements, insurance fraud, and engaging in a conspiracy to commit each of these state law violations." She claims that they "created and used more than 200 false asset valuations over a ten-year period."
James charged that as head of the Trump Organization, the former president "falsely inflated his net worth by billions of dollars to unjustly enrich himself and to cheat the system." She said that in addition to state law, her office has referred certain violations, "including issuing false statements to financial institutions and bank fraud," to the Southern District of New York and the Internal Revenue Service (IRS) for federal criminal investigation.
Part of the investigation involved cooperation from Allen Weisselberg, Trump's longtime CFO, who pled guilty last month to tax fraud and agreed to testify against the company.
For example, the Trump Building located at 40 Wall Street was appraised between $200-220 million between 2010 and 2012. But according to the filing, during that same period, the Trump Organization listed the building's value as around $525 million. Higher valuations allowed Trump to qualify for more money or more favorable loan terms.
James even accused Trump of fraudulently tripling the size of his residence in Trump Tower, claiming it was over 30,000 square feet when it was less than 11,000. According to James, quoting Weisselberg, the overage led to an erroneous overvaluation of "give or take $200 million."
During Trump's four years as president, numerous journalistic outfits reported on his longtime practice of overvaluing or undervaluing his assets depending on which one was advantageous. A decade before running for office, Trump even admitted in a deposition that his self-reported net worth fluctuates depending in part upon "my own feelings."
James' office is seeking restitution in the form of $250 million in "financial benefits" improperly obtained, as well as to "permanently bar Mr. Trump, Donald Trump Jr., Ivanka Trump, [and] Eric Trump from serving as an officer or director" in a New York corporation, and barring Trump himself from "entering into any New York State commercial real estate acquisition or from applying for loans from any financial institution in New York for five years." James achieved a similar judgment in a previous case involving the family's charitable nonprofit, the Trump Foundation: The family shuttered the charity, paid a $2 million fine, and Trump himself agreed to restrictions on his future service on any charitable board.
Notably, James cited multiple questions for which Trump pleaded the Fifth rather than answering. While the right to be secure against self-incrimination is one of the key features of the Bill of Rights, James intimated that Trump's refusal to answer indicated evidence of his knowing criminality. But while criminal defendants who plead the Fifth are supposed to be protected from the assumption of guilt solely because they refused to answer questions, civil defendants have no such protection against "adverse inference." In Baxter v. Palmigiano (1976), the Supreme Court ruled that "the Fifth Amendment does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them."
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