New York Attorney General Letitia James has returned to court to stop Donald Trump and the Trump Organization from potentially evading the consequences of her recent lawsuit that charges them with fraudulent and illegal business activity, citing concerns over the formation of a new Trump corporation in Delaware.
James wants the Supreme Court of New York County to keep the Trump Organization from moving assets out of New York and to issue a preliminary injunction to stop the Trump Organization from using financial documents that she alleges are misleading, including Trump’s 2021 statement of financial condition, in any new business deals.
According to the Office of the Attorney General, in September around the same time James filed her lawsuit, the Trump Organization registered a new entity with the New York secretary of state called The Trump Organization II LLC, a foreign corporation that was incorporated in Delaware on September 15, 2022. The OAG fears this may be used to transfer assets out of New York or potentially shield funds that might be available to satisfy any disgorgement award.
OAG said it expressed to the Trump Organization its concerns about whether the company is taking steps to avoid the jurisdiction of the court or make it difficult to obtain relief against the corporate entities. The OAG said counsel for the Trump Organization has offered to “provide ‘assurance’ and/or ‘reasonable advance notice’ to address its concerns but “made no concrete proposals for how to implement those assurances or enforce them.”
Trump’s attorney, Alina Habba, told CNBC that her firm has “repeatedly provided assurance, in writing, that the Trump Organization has no intention of doing anything improper.”
James is concerned that Trump and his organization will continue to engage in the fraudulent and illegal business activity as alleged in the AG’s September 2022 lawsuit, such as loans and insurance renewals, between now and a trial, for which a date of mid-October 2023 has been proposed.
New York AG’s Financial Fraud Suit Against Trump Details Insurance Scenarios
James has also asked Supreme Court Judge Arthur Engoron to appoint a monitor to oversee the Trump Organization’s financial disclosures until trial. The monitor would oversee the submission of financial disclosure information to any accounting firm compiling Trump’s 2022 statement of financial condition; financial disclosures to lenders and insurers required by continuing obligations or to obtain new financing and insurance; and any corporate disposition of significant assets.
“Since we filed this sweeping lawsuit last month, Donald Trump and the Trump Organization have continued those same fraudulent practices and taken measures to evade responsibility. Today, we are seeking an immediate stop to these actions because Mr. Trump should not get to play by different rules,” James stated.
The OAG is also asking the court for permission to serve Donald Trump and his son, Eric, electronically, as the OAG said both defendants and their counsels have refused to accept service of the complaints for almost a month.
The OAG’s lawsuit alleges that Donald Trump, his children and other senior executives at the Trump Organization, falsely inflated his net worth by billions of dollars to obtain more favorable loan, insurance, tax and other financial benefits. From 2011 to 2021, Trump and the Trump Organization “knowingly and intentionally” created more than 200 false and misleading valuations of assets to defraud financial institutions, the suit alleges.
After the suit was filed, Habba, Trump’s lawyer, told the New York Times the charges are “meritless.” The former President called the New York AG a “racist” for going after him and his family and labeling the lawsuit a “witch hunt.” His sons, Donald Jr. and Eric, also blasted the suit as a “witch hunt.”
While the bulk of the fraud charges concern bank loans, the suit also charges the Trumps with insurance fraud under state laws that prohibit the submission of false information as part of an application for commercial insurance or to claim a benefit under an insurance policy. The suit provides details on two insurance scenarios where Aon Risk Solutions was the broker and the Trumps are alleged to have submitted false information: a surety bond program with Zurich North America, and directors and officers liability coverages from Everest National and Tokio Marine HCC.
In its original complaint the AG seeks to permanently bar the Trumps from serving as officers or directors in any New York corporation; bar Trump and the Trump Organization from entering into any New York real estate acquisitions for five years; and award disgorgement of all financial benefits obtained through the persistent fraudulent practices, estimated to total $250 million.
In conjunction with the lawsuit, James said she also referred the matter to the U.S. Attorney’s Office and the Internal Revenue Service for possible criminal investigation.
Topics New York
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