N.Y. Attorney General Accuses Trump of ‘Staggering’ Fraud in Lawsuit

By Jonah E. Bromwich, William K. Rashbaum and Ben Protess 

New York Attorney General Letitia James filed a sweeping lawsuit Wednesday accusing Donald J. Trump, his family business and three of his children of lying to creditors and insurers by fraudulently overstating his fortune by billions of dollars.

Ms. James is trying to prevent the Trumps, including Donald Jr., Eric and Ivanka, from ever doing business in the state again.

She concluded that Mr. Trump and his business violated state criminal laws and "likely" violated federal laws as well. Her office, which does not have the authority to file criminal charges in this case, referred the findings to federal prosecutors in Manhattan. They declined to comment on whether they would investigate.

The 220-page lawsuit, filed in State Supreme Court in Manhattan, lays out in new and startling detail how Mr. Trump's annual financial statements were a compendium of lies, according to Ms. James. The statements — annual records that include the estimated value of the company and its debts — wildly inflated the value of nearly all of its marquee properties, according to the suit. These include Mar-a-Lago in Florida, Trump Tower and 40 Wall Street in Manhattan.

The company also routinely rejected evaluations by outside experts. After the bank ordered an appraisal that found 40 Wall Street to be worth $200 million, the Trumps promptly valued it at more than double that amount. In all, the lawsuit said Mr. Trump's 11 annual financial statements contained more than 200 false and misleading asset valuations.

"The amount of grossly inflated asset values ​​is staggering and affects most, if not all, of the real estate holdings in a given year," the lawsuit states. James, a Democrat who is running for re-election, filed the lawsuit just weeks after the former president refused to answer hundreds of questions under oath in an interview for her office.

In a post on his Truth Social network, Mr. Trump attacked the investigation and Ms. James, as he has throughout the investigation. “Another witch hunt by the racist Attorney General Letitia James,” Mr. Trump wrote, adding, “She is a fraud who campaigned on a platform of 'get Trump.'

Mr. Trump has long used his net worth to create a public persona as a self-made billionaire, an image that fueled his initial bid for the White House. But he had a financial incentive to inflate his property values, according to Ms James.

His company, the Trump Organization, provided fraudulent financial statements to lenders and insurers, her lawsuit said, "to obtain favorable financial terms," ​​including lower interest rates and premiums. Ms James said Trump had managed to raise a quarter of a billion dollars, which he now wants the company to forfeit.

In a statement, the Trump Organization noted that its creditors have "profited handsomely — to the tune of hundreds of millions of dollars in interest and fees" from their dealings with the company. The statement also attributed Ms. James's actions to "politics, pure and simple," arguing that she "put her own political ambitions before the safety of New Yorkers."

"We look forward to defending our client against any unwarranted claims made by the attorney general," said Trump's lawyer, Alina Habba.

Alan S. Futerfas, a lawyer for Ivanka Trump and Donald Trump Jr., declined to comment. But on Twitter, Donald Trump Jr. wrote that Mrs. James "arms her office to go after her political opponents!"

Mrs. James is trying to extract a high price from the former president and his company. Her lawsuit asks a judge to appoint an independent monitor to oversee the company's financial practices and oust the Trumps from running their family business. Ms. James is also seeking to prevent the family from acquiring real estate in New York for five years.

If the judge agrees, Mr. Trump and his children will also be permanently barred from serving as officers or directors of any New York company. While Ms. James has stopped short of trying to dissolve the Trump Organization, she wants to end at least some of the former president's operations in New York.

It's unclear whether a judge would hand down any of the harsher consequences he's seeking. In an unrelated case against the National Rifle Association, Ms. James sought to dissolve the organization, but a judge denied that request.