NY Attorney General Says Evidence Shows Trump Company Inflated Asset Values for Loans and Tax Breaks

On Tuesday, after years of investigating former President Donald Trump, New York Attorney General Letitia James used a court filing to lay out much of what her investigators have found. The legal memo argues that the Republican's company relied on "fraudulent or misleading" valuations of its assets while seeking loans and tax breaks.

The filing does not charge Trump with anything. He has not been charged with any wrongdoing, and James has not yet decided whether to file a civil lawsuit at all. What she has done is put a pattern on the public record.

James, a Democrat elected attorney general in 2018, has a long history with Trump. She sued him multiple times on behalf of the state over his policies as president, and she has also sued the National Rifle Association. She was instrumental in Gov. Andrew Cuomo's fall from power, releasing a report over the summer that said he sexually harassed 11 women. She briefly ran for governor last fall before deciding to seek reelection as attorney general.

Her office has been examining whether the Trump Organization obtained loans or tax breaks by lying about the value of Trump's assets. The distinction matters. Trump was scrutinized over the size of his fortune long before he reached the White House, and it is not illegal to exaggerate to the public what a penthouse is worth. It could be a crime, though, to lie about asset values to banks, business partners or tax authorities.

According to James's office, investigators found the company repeatedly used dubious or unsupported methods to inflate the worth of what it owned. One example among many: the filing says the company raised the estimated value of Trump's Manhattan penthouse by $200 million by claiming it was nearly three times its actual size. Financial statements carrying the inflated figures were then submitted to banks to get credit and to meet the terms of existing loans. The office says such statements once helped Trump secure $300 million in loans from Deutsche Bank. The filing also says the company overvalued land donations in New York and California to justify millions of dollars in tax deductions.

The immediate purpose of the filing was to persuade a judge that Trump and two of his children, Donald Trump Jr. and Ivanka Trump, should be forced to answer questions under oath. New York University law professor Stephen Gillers said James likely also feels "she has a duty to tell the public what she is doing and why," given Trump's intense criticism of the investigation as politically motivated. Gillers added that it may serve as a warning too: "It's like when a country displays its guns and tanks in a military parade, meant to warn opponents, 'Don't mess with us.'"

The Trump Organization, the company through which Trump manages his office towers, hotels, golf courses and marketing deals, called the investigation "baseless" and politically driven. It said James had "defrauded New Yorkers by basing her entire candidacy on a promise to get Trump at all costs without having seen a shred of evidence and in violation of every conceivable ethical rule." Donald Trump Jr. tweeted that she should be disbarred.

The company is already in legal trouble elsewhere. In July, it and its chief financial officer, Allen Weisselberg, were indicted on tax fraud charges, accused of conspiring to pay senior executives lucrative fringe benefits off the books. That case, overseen by the Manhattan district attorney, is separate from James's civil probe.

Next, a judge will decide whether Trump, Ivanka Trump and Donald Trump Jr. must submit to questioning. When her investigation concludes, James could sue to seek financial penalties or a ban on involvement in certain kinds of business. The Manhattan district attorney has separately convened a grand jury to examine many of the same issues. Politically, the filing is unlikely to shift much, as supporters and critics are firmly set. Even an indictment or conviction would not bar a 2024 run, and Trump has already used the probe to rally supporters, airing an anti-James video at an Arizona rally last weekend.