Could Trump lose his business empire in New York fraud case?

The ex-president faces a slew of legal challenges, but this one strikes most deeply at his ‘business mogul’ persona.

Trump holds up papers at a courthouse
Former US President Donald Trump holds papers at a Manhattan courthouse, where he attended the trial of himself, his adult sons, the Trump Organization and others in a civil fraud case brought by state Attorney General Letitia James, in New York City on October 2, 2023 [Brendan McDermid/Reuters]

Former US President Donald Trump could be banned from the real estate business in New York, a potentially devastating blow to his real estate empire that catapulted him to fame long before winning the White House.

Trump is accused of securing loans with false financial statements for several years. After a heated trial that lasted more than three months, a Manhattan court is set to announce its ruling this week.

The New York fraud case is only one of several trials heating up against Trump even as he inched closer to securing the Republican presidential nomination following his decisive victory in the Iowa caucus and New Hampshire primary earlier this month.

Here’s what we know about this civil case and how it might affect Trump’s presidential campaign:

What’s the case about?

New York Attorney General Letitia James brought the civil lawsuit against the former president, The Trump Organization, and top officials at the business on September 21, 2023 – although an inquiry into the former president’s business dealings had been ongoing for about three years prior.

In the filing, James accused Trump and officials at The Trump Organization – including his children, Ivanka, Eric and Donald Jr – of “knowingly and intentionally” creating over 200 overly-inflated financial evaluations between 2011 and 2021 that helped the company secure favourable loans from banks and insurance companies to the tune of $250m.

Those actions violated the antifraud New York Executive Law, James wrote in her suit, seeking a $250m penalty against Trump.

Senior Trump Organization executives Allen Weisselberg and Jeffrey Mcconney were also named as defendants, alongside companies and entities belonging to Trump such as 40 Wall Street, a skyscraper in Manhattan’s financial district. Trump’s sons Donald Trump Jr and Eric Trump are co-defendants in the case.

What did the judge say about Trump?

In a summary judgment on September 27, 2023, that essentially resolved the key claims in the suit, presiding Judge Arthur Engoron of the Manhattan Supreme Court ruled that Trump had committed years of fraud by massively inflating his real estate worth to lenders. His Mar-a-Lago estate, for example, was found to be inflated to about 2,300 percent of its actual price in one statement.

Judge Engoron dissolved some companies belonging to the former president and also ordered to revoke the business licence of The Trump Organization, and appointed an independent monitor to oversee the company.

Trump has denied wrongdoing and appealed the initial ruling. An appeal court in October temporarily halted the business dissolution part of the ruling. Trump’s lawyers argued some 1,000 employees could be affected. James’s team said it was willing to pause enforcement pending a final decision.

In the charged follow-up trial to decide other claims in the attorney general’s lawsuit, Trump’s lawyers asked for the suit to be thrown out, arguing that it was politically motivated; that his accountants carried the blame for false financial statements; and that no particular individuals or entities had been hurt by said statements.

Could this affect Trump’s political campaign?

Trump’s presidential campaign has played on the civil suit – and the myriad of legal challenges that the Republican frontrunner faces, ahead of the presidential elections in November.

The former president has appeared at court cases he is not legally required to attend, making impassioned speeches to rally his supporters behind opponents trying to block his re-election, targeting not just him but his supporters too.

He has also used those court appearances to lash out at state officials. Trump accused James, the New York attorney general, of targeting him for political reasons, calling her a “political hack” who won her post because she promised to go after him.

Despite the judge’s refusal, Trump spoke in court at the closing of the fraud trials on January 11, saying that the case was a “fraud on me”.

“We have a situation where I’m an innocent man, I’ve been persecuted by someone running for office,” Trump said, referring to James, a Democrat who attempted to run for New York governor in the 2022 elections but later dropped out. “They want to make sure that I don’t win again,” he added.

Throughout the three-month trial, Trump spoke insultingly of the judge to his supporters, saying Engoron was a biased “Trump hater.” He also attacked Allison Greenfield, Engoron’s law clerk, on his social media platform Truth Social, saying she was “politically biased and out of control”.

Judge Engoron slapped a gag order on the former president and later fined him $15,000 for breaching it.

Could Trump face criminal penalties?

Civil cases like this usually result in monetary penalties and bans called injunctions, as opposed to criminal cases that often end up in jail time.

James, in her suit against Trump, had recommended punishment: for the former president and his children to be stripped of their leadership roles at The Trump Organization, and for Trump and the business to be barred from any real estate buys in New York for the next five years.

Additionally, the attorney general recommended that Trump and The Trump Organization be forbidden from accessing any loans for five years and that independent monitors and trustees be appointed for The Trump Organization.

As Judge Engoron’s final ruling looms, it will likely complement his previous decisions that some of Trump’s companies have their licences revoked, some be dissolved and others be monitored independently.

Source: Al Jazeera