Former US President Donald Trump arrives at a Manhattan courthouse, for the trial of himself, his adult sons, the Trump Organization and others in a civil fraud case brought by state Attorney General Letitia James, in New York City, on October 2, 2023. Image Credit: Reuters

New York: Donald Trump will face off against New York Attorney General Letitia James starting Monday in a contentious civil trial that threatens his control over his real estate empire in the state.

The former president is accused of corrupting his relationship with banks and insurers for more than a decade by giving them financial statements that inflated the value of his assets by billions of dollars a year, from Trump Tower in Manhattan to his Mar-a-Lago estate in Florida. As penalties James is seeking a quarter of a billion dollars and to bar Trump and his eldest sons from serving as an officer of any New York company.

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State Supreme Court Justice Arthur Engoron, who will oversee the trial and decide on the verdict, resolved the biggest claim in the case last week by holding Trump liable for fraud. The non-jury trial will now focus on the six remaining claims against Trump and his company, including issuing false financial statements and conspiring to falsify business records. That will determine the penalties.

Engoron is scheduled to hear evidence for almost three months. Trump, who is juggling five other civil and criminal trials as he campaigns to return to the White House, arrived for the trial on Monday. He is expected to testify in person at some point later in the proceeding. His two sons Donald Trump Jr. and Eric Trump, who are also defendants in the case, are due to testify, too.

Trump said his civil fraud trial starting in New York Monday is a “sham” and called the state attorney general who brought the case a “horror show.”

Also calling the trial a “scam,” Trump told reporters outside the courthouse that the judge in charge was a “rogue judge.”

“This is a continuation of the single greatest witch hunt of all time,” he said as he made a voluntary trip to a New York court for a trial that has high stakes for him.

“It’s a scam. It’s a sham,” the Republican said, reiterating claims that New York Attorney General Letitia James' suit is a politically motivated attempt to thwart his return to the White House.

“What we have here is an attempt to hurt me in an election,” he charged, adding: “I don’t think the people of this country are going to stand for it.”

He looked away from James, a Democrat, as he passed her on the way into court, with a disgusted look on his face.

The suit accuses Trump and his company of deceiving banks, insurers and others by habitually lying about his wealth in financial statements.

Judge Arthur Engoron already has ruled that Trump committed fraud in his business dealings . It is a non-jury trial, so Engoron will decide on six other claims in the lawsuit.

New York Attorney General Letitia James arrives for the start of the trial of Trump, his adult sons, the Trump Organization and others in a civil fraud case brought by her, at a Manhattan courthouse in New York City. Image Credit: REUTERS

James, a Democrat, is seeking $250 million in penalties and a ban on Trump doing business in New York. The judge’s ruling last week, if upheld on appeal, could force Trump to give up New York properties including Trump Tower, a Wall Street office building, golf courses and a suburban estate.

Trump, the Republican front-runner in the 2024 presidential race, has denied wrongdoing. He says that James and the judge are undervaluing such assets as Mar-a-Lago, and that it didn’t matter what he put on his financial statements because they have a disclaimer that says they shouldn’t be trusted.

In posts overnight on his Truth Social site, he said he was going to court “to fight for my name and reputation,” denounced the case as “A SHAM,” and called on the attorney general and judge to resign.

Before the trial Monday, James reiterated her position that Trump for years engaged in “persistent and repeated fraud.”

“No matter how powerful you are, and no matter how much money you think you have, no one is above the law," she said on her way into the courthouse.

Trump isn’t expected to testify for several weeks. His trip to court Monday marked a remarkable departure from his past practice.

The trial may also shed light on Trump’s fraught relationship with his bankers. Six current and former employees of Deutsche Bank AG, one of Trump’s biggest lenders before it cut ties after the January 2021 insurrection at the US Capitol, are on the state’s witness list.

The suit doesn’t allege that the banks lost money by working with Trump, but the state does argue the institutions were put at risk because they made lending decisions based on falsified information.

The 77-year-old Republican presidential front-runner denies wrongdoing in all the cases against him and calls James’s suit part of a political assault by Democrats to hobble his campaign.

Here’s what you need to know:

The allegations

James sued Trump in 2022, alleging he engaged in a “staggering” fraud by overstating the value of his properties by as much as $3.6 billion a year on his statements of financial condition and lying about his net worth. She began investigating the valuations in 2019 after Trump’s former lawyer and fixer Michael Cohen testified to Congress that his longtime boss manipulated asset valuations to overstate his wealth.

Trump has rejected the claims and said the Democratic attorney general “targeted” him. On his Truth Social platform he declared he had “a great case based on phenomenal numbers that show a net worth billions of dollars more than she viciously & falsely claimed, very little debt, big cash, a powerful disclaimer clause, paid off loans, no defaults, ‘happy’ banks, great assets.”

The stakes

The trial doesn’t carry the threat of imprisonment as the four criminal cases against him do. But the twin threats of the huge penalty and the New York ban pose a potential blow to his businesses.

Image Credit: AFP

With the pretrial fraud ruling, Engoron has already ordered the dissolution of any certificates issued to Trump’s limited liability companies under New York law, putting control of his biggest assets at risk.

The full impact of the ruling, which won’t be part of the trial, isn’t yet clear. At a hearing Wednesday, Engoron gave Trump and James 30 days to recommend the names of potential independent receivers to oversee the dissolution of the companies. The Trump Organization is made up of some 500 entities.

The assets

The properties at the centre of the case are among Trump’s most valuable and iconic.

According to James, Trump falsely valued Mar-a-Lago at $347 million to $739 million over a decade based on its potential for residential development. Because it is restricted for use only as a private club, James alleges it should have been valued closer to $75 million. Trump reported the size of his triplex apartment on Fifth Avenue in Manhattan at about 30,000 square feet instead of the actual 11,000 square feet, boosting its value to $327 million from $80 million, according to James.

Engoron said of Trump’s triplex that “a discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud.”

Trump’s Defence

Trump argues James can’t sue under New York law because the allegedly fraudulent asset valuations didn’t harm the public and because the “purported victims” are all “corporate titans fully capable of advancing their own considerable legal rights.” He has said his annual statements of financial condition “- the documents at the center of the case “- all contained “strong disclaimers” that warned financial institutions against using the stated figures without double-checking them.

An anti-Trump demonstrator holds up a sign, on the day of the start of the trial of Trump, his adult sons, the Trump Organization and others in a civil fraud case brought by state Attorney General Letitia James, at a Manhattan courthouse in New York City. Image Credit: Reuters

Engoron and appellate judges have already rejected these defenses. For example, the court ruled last year that “allowing blanket disclaimers to insulate liars from liability would completely undercut” the function that statements of financial condition fulfill “in the real world.”

Trump’s testimony

The evidence against Trump includes excerpts from a seven-hour deposition during which he was questioned under oath by James’s office in April. At the session, Trump explained his philosophy on calculating asset values and wealth.

He claimed his name alone was worth at least $3 billion as “the hottest brand in the world” and defended the valuations he placed on his biggest assets by calling them “the Mona Lisas of property.”

He also testified that the ultimate decision-making authority at the company lay with his son Eric. But when questioned in the case in March, Eric Trump testified that he had no role in the valuation of properties.

What other trials is Trump potentially facing in the next year?

Trump, a Republican candidate in the 2024 presidential race, has been indicted four times, including in New York for allegedly falsifying business records. A trial date in that case has been set for March but could change.

He could stand trial several other times before the election. Criminal charges are pending in Washington and in Fulton County, Ga., related to the Jan. 6, 2021, attack on the U.S. Capitol and attempts to overturn the results of the 2020 election. In Florida, he faces federal charges for his alleged hoarding of highly sensitive government documents after his term, and alleged attempts to obstruct government efforts to get them back.

In New York, two other unrelated civil cases against Trump are expected to go to trial next year.