By Bridget J. Crawford
New York Attorney General Letitia James hit former president Donald Trump with a $250 million lawsuit on Sept. 21, citing “staggering” amounts of falsified business information and fraud.
The civil lawsuit alleges that Trump, his company — the Trump Organization — and three of his children lied to lenders and insurers about billions of dollars’ worth of assets. This follows a three-year investigation into Trump’s New York–based real-estate business.
The Conversation spoke with Bridget J. Crawford, an expert on tax and property law at Pace University, to help navigate the various dimensions and the potentially broader, criminal implications of this lawsuit.
What are Trump and his children accused of in the lawsuit?
The complaint is over 200 pages long and contains many specific claims. But, at its heart, the complaint says the Trump Organization made false financial or business statements in order to get loans or to keep those loans on favorable terms, in a way that was dishonest or fraudulent.
Trump didn’t allegedly overestimate the cost of buildings, which is a technical term, but rather he is accused of inflating the value of certain businesses and properties.
Lukas I. Alpert: Exaggerations, overvaluations and out-and-out lies: the 6 most egregious examples of Donald Trump’s alleged inflation of his wealth
How does overstating the value of properties help Trump?
Banks want to make loans to people who are likely to be able to repay them. And how does the bank measure whether someone is likely to repay? It’s knowing the recipient of a loan has enough collateral to satisfy the bank’s concerns. Trump said he had collateral worth a certain amount. James is saying that the values are really wrong, and really wrong over a period of years, in multiple different filings. Moreover, the lawsuit says this is not just a mistake, or an, “Oops I got it wrong.” Rather, the attorney general alleges a systematic pattern of fraud.
What should we make of this being a civil, not criminal, action?
James is bringing a lawsuit regarding the Trump Organization’s compliance with New York’s civil laws , meaning business and lending laws and the like — hence it is a civil suit.
That said, James made clear that she has also referred certain matters to both the the federal Internal Revenue Service and to the federal prosecutors in the Southern District of New York for criminal investigation.
So this being a civil lawsuit does not mean we won’t potentially see criminal charges further down the line. Just, at this point, the New York attorney general is focused on the civil-law violations.
In other words, this could be just the beginning of a longer story.
What does the lawsuit demand in way of relief?
This is where it gets interesting, I believe. James is calling for very dramatic relief, including permanently preventing Trump, along with three of his children — Donald Trump Jr., Eric Trump and Ivanka Trump — from serving as a director or officer of any corporation conducting business activities in New York. It could preclude them from having any formal business ties in New York. This would be a severe blow to the family’s business interests.
How would an IRS investigation differ from the New York one?
