N.Y. judge finds Trump committed fraud and sanctions his attorneys
New York Supreme Court Justice Arthur Engoron also ordered the cancellation of Trump business certificates and imposed sanctions on attorneys representing him, two of his adult children, two other company executives and the business for repeating arguments that failed multiple times previously and were called “borderline frivolous.”
The judge’s ruling represents a significant setback for Trump by revoking his company’s authority to do business in New York, where the Trump Organization is headquartered and where Trump has major real estate interests. It also represents a victory for Attorney General Letitia James (D), who had asked that Engoron simplify the upcoming trial by deciding in advance that fraud was broadly committed so the state would need to prove only specific illegal acts.
Trump and his attorneys have denied any wrongdoing. Trump spokeswoman Alina Habba said the judge’s ruling Tuesday would be appealed.
Five Trump attorneys have been ordered to pay $7,500 each to a state organization that reimburses clients whose attorneys misused funds. One of the attorneys sanctioned by Engoron is Christopher Kise, a former Florida solicitor general who also represents Trump in federal court there in the indictment over the retention and mishandling of classified documents.
The decision orders the parties to suggest candidates for receivers who will oversee the dissolution of the various entities that make up the Trump Organization’s corporate structure — a ruling that appears to mean the collapse of its operations in New York.
Kise issued a statement on behalf of the defense team calling the decision “outrageous” and “completely disconnected from the facts and governing law.”
“Without even conducting a trial, the Court substituted its own judgment for that of nationally recognized experts from the NYU Stern School of Business and beyond,” Kise said. “More importantly, the Court disregarded the viewpoint of those actually involved in the loan transactions who testified that there was nothing misleading, there was no fraud, and the transactions were all highly profitable.”
James filed a lawsuit against Trump and his company last year alleging that the Trump Organization and its executives defrauded lenders and insurance companies from 2011 to 2021 by inflating Trump’s net worth in business transactions.
By manipulating the value of Trump’s property and other real estate assets by up to $2.2 billion annually, the real estate, hospitality and golf resort company obtained better interest and policy rates than it otherwise would have, according to the lawsuit.
Trump is expected to stand trial along with his sons Donald Trump Jr. and Eric Trump, who served as executives, longtime finance chief Allen Weisselberg and long-serving comptroller Jeffrey McConney.
The trial is scheduled to begin Monday but could be postponed because of an ongoing appellate court issue. It is unclear whether Tuesday’s decision will change the schedule.
A preliminary witness list compiled by the attorney general’s office included nearly 60 names, including the former president. Trump is expected to testify at the trial.
In finding that the defendants committed fraud under the state’s civil law, Engoron will now be left to determine at the bench trial whether specific illegal conduct occurred as well as what other penalties the defendants should face. The case is civil so the defendants can only be found liable for engaging in that conduct and do not face prison.
Trump, however, faces the potential of prison in four unrelated criminal cases, one of which was filed in New York. He could stand trial on those cases next year while he campaigns for the 2024 presidential election.
In the decision, Engoron criticized the Trump defense team’s failed arguments that earned it the sanctions because it kept repeating them.
“Defendants’ conduct in repeating these frivolous arguments is egregious,” Engoron wrote. “The defenses Donald Trump attempts to articulate in his sworn deposition are wholly without basis in law or fact.”
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