New York Attorney General Letitia James filed a sweeping lawsuit Wednesday against former President Donald Trump, his three oldest children and the Trump Organization in connection with her yearslong civil investigation into the company’s business practices.
In the suit, which runs more than 200 pages, James’ office details what it says are Trump’s efforts to inflate his personal net worth to attract favorable loan agreements and alleges more than 200 instances of fraud over 10 years.
James is seeking to permanently bar the Trump family from serving as officers of New York-based companies and prevent Trump and his company from entering into commercial real estate acquisitions in the state for five years. She is also seeking about $250 million in penalties. In addition, her office is sending a criminal referral to the IRS and US prosecutors in Manhattan, she said.
“For too long, powerful, wealthy people in this country have operated as if the rules do not apply to them,” James said in a statement. “Donald Trump stands out as among the most egregious examples of this misconduct. With the help of his children and senior executives at the Trump Organization, Donald Trump falsely inflated his net worth by billions of dollars to unjustly enrich himself and cheat the system.”
A spokesperson for the IRS’ criminal investigations division declined to comment specifically on James’ criminal referral comments but said in a statement to NBC News:
“IRS Criminal Investigation (IRS-CI) receives tips about potential criminal activity from a variety of sources every day. Special agents review information received for further criminal investigation. The agency doesn’t confirm the existence of investigations until court documents are publicly available.”
Alina Habba, a lawyer representing Trump in the case, said James’ lawsuit “is neither focused on the facts nor the law — rather, it is solely focused on advancing the attorney general’s political agenda.”
“It is abundantly clear that the attorney general’s office has exceeded its statutory authority by prying into transactions where absolutely no wrongdoing has taken place,” Habba said.
Trump also made disparaging remarks about James on his Truth Social platform Wednesday, saying his investigation was a politicized “witch hunt” and calling James, who is Black, a “racist.”
“I never thought this case would be brought — until I saw her really bad poll numbers,” Trump said, referring to James’ re-election campaign. “She is a fraud who campaigned on a ‘get Trump’ platform, despite the fact that the city is one of the crime and murder disasters of the world under her watch!”
A Trump Organization spokesman, henceforth, characterized James’ suit as a “culmination of nearly three years of persistent, targeted, unethical political harassment.”
“While the job of the attorney general is to protect the interests of the public, today’s filing, for the first time in the history of the attorney general’s office, seeks to protect the interests of large, sophisticated Wall Street banks,” the spokesman said in a statement.
James’ office said in a release that Trump made fraudulent and misleading statements “in both their composition and their presentation.” Trump also made it known through Allen Weisselberg, the Trump Organization’s former chief financial officer, that he wanted his net worth to increase every year, and he used financial statements as a “vehicle” to fraudulently inflate his net worth by billions of dollars annually, her office alleges. Weisselberg’s lawyer, Nicholas Gravante, declined to comment about the allegations in the lawsuit.
James said that Trump and his company falsely claimed their statements were prepared in consultation with outside professionals and that the documents blatantly violated “generally accepted accounting principles.” The alleged violations include that Trump had cash on hand that he did not, representing ignoring critical restrictions that would significantly lower property values, changing the methodology for estimating such values from year to year, using different methods for various properties even in the same year and including intangible items in the calculations.
At a news conference Wednesday, James detailed Trump and his company’s alleged violations of state and federal laws by having “repeatedly and persistently manipulated the value of assets to induce banks to lend money” to the organization “on more favorable terms than would otherwise have been available to the company.”
For example, Trump inflated the square footage of his triplex apartment in Trump Tower, she said. “Mr. Trump represented that his apartments spanned more than 30,000 square feet, which was the basis for valuing the apartment,” she said. “In reality, the apartment had an area of less than 11,000 square feet, something that Mr. Trump was well aware of.”
Asked during the news conference whether she would be willing to reach a settlement agreement, James declined to “negotiate in public,” but she confirmed a New York Times report last week that her office had rejected a settlement offer.
A spokesperson said the US Attorney’s Office for the Southern District of New York was aware of the criminal referral from James’ office but declined to comment further.
Manhattan District Attorney Alvin Bragg said in a statement that his office’s criminal investigation into Trump and his company is “active and ongoing.”
James’ lawsuit follows months of efforts by Trump and his three oldest children — Donald Jr., Ivanka and Eric Trump — to avoid testing and turning over business documents. Trump sued James in federal court in December, casting her investigation as politically motivated and seeking a halt to the probe. US District Judge Brenda K. Sannes dismissed the lawsuit, ruling that while Trump and his company pointed to several comments that they argue show James’ “personal animus toward Mr. Trump and evince an intent to retaliate for or stifle plaintiffs’ free speech,” they did not show that her effort to enforce subpoenas against the company “was commenced for the purpose of retaliation.”
Trump also sought to impede the probe in New York courts, but in February, a state judge ordered him, Donald Trump Jr. and Ivanka Trump to sit for deposits and produce the documents subpoenaed by James.
The Trump Organization has denied any wrongdoing in court filings and argued that it has exceeded expectations in complying with document requests. James’ office pushed back against the assertion and sought to hold Trump in civil contempt. Her office alleged in court filings in April that Trump failed to comply with state Supreme Court Justice Arthur Engoron’s order to turn over subpoenaed documents and sought to fine him $10,000 a day until he provided the records, which the judge granted weeks later.
During an hourslong deposition at James’ office last month, Trump invoked his Fifth Amendment right against self-incrimination, answering only a question about his name, said his attorney Ron Fischetti. Fischetti said Trump was asked about the valuations of various items and golf clubs, signing documents, mortgages, loans and the size of his apartment. A source with knowledge of the deposition said Trump invoked the Fifth more than 440 times.
The deposition took place weeks after Donald Trump Jr. and Ivanka Trump tested in the civil probe in July. NBC News reported that neither of Trump’s two oldest children invoked the Fifth Amendment’s protection. Other Trump Organization executives have also been questioned, including Eric Trump.
The Trump Organization also faces a criminal prosecution over its business dealings, led by the Manhattan district attorney. Weisselberg, the company’s former chief financial officer, pleaded guilty to tax fraud charges in that case, which is set to go to trial next month.
Trump also faces a federal investigation over his storage of sensitive documents at his Mar-a-Lago home in Florida. Trump has contended that he declassified the various top-secret and other highly sensitive documents that were found there.
CORRECTION (Sept. 21, 2022, 2:19 pm ET): A previous version of this article misstated how long the New York attorney general wants to bar Trump and his three elder children from serving as officers in New York-registered companies. The attorney general seeks a permanent ban, not one that would last five years.