What to know about the civil fraud case against Donald Trump and his family in New York


“This behavior cannot be brushed aside and dismissed as some kind of good-faith mistake,” James told reporters on Wednesday.

“No one, my friend, is above the law,” he added.

Trump and his company used “false and misleading” financial statements, his lawsuit alleges allegedly, “again and again and again, to induce banks to lend money to the Trump Organization on the most favorable terms otherwise available to the company, to meet ongoing loan covenants and to provide insurance coverage for higher and lower insurance coverage limits. premiums.”

Trump responded to the lawsuit by calling James a fraud who campaigned on a “get Trump” platform, despite the city under his watch being one of the world’s worst crime and murder disasters.”

The filing of the lawsuit allows James to publicly disclose a wide array of financial fraud allegations, which the attorney general says spanned a decade and touched nearly every aspect of Trump’s business empire. James said he has also made referrals to federal law enforcement authorities.

Here’s what you need to know about James’ new case:

In more than 200 cases, James said, Trump embellished the value of his assets

Under the schemes alleged by James, Trump’s financial statements — which were provided to banks and other entities doing business with Trump — included asset values ​​that were grossly contradicted or otherwise falsified by internal records.

“However, Mr. Trump, the Trump Organization and the other defendants, as part of a repeated pattern and common scheme, derived more than 200 false and misleading asset values ​​from 2011 to 2021 in 11 Statements,” the lawsuit said. he said

He characterized James one of the passages as a “two sets of books” scenario: “a set of internal records reached a conclusion about the market value, but the figure presented in Mr. Trump’s Statement was considerably higher.”

James says Trump benefited “enormously” financially by misrepresenting his financial statements, including $150 million, which James said he misled his team into favorable interest rates from banks.

The alleged schemes touch several Trump properties, including golf courses, hotels and Mar-a-Lago

James said the misstatements in Trump’s financial statements affected “most if not all” of his and his company’s “real estate holdings.”, including some of Trump’s high-profile business ventures.

Trump valued Florida’s Mar-a-Lago club at $739 million, when the property was likely a tenth of that, James alleged, accusing Trump of further increasing the resort’s value by taking a “brand premium.”

U.S. accounting standards prohibit such premiums, and Trump’s financial statements “expressly say they exclude brand value,” James said.

A 2011 appraisal of Trump’s Westchester golf course in New York included new members paying $200,000 in initiation fees, although Trump has ordered the club to reduce or waive those fees in an effort to increase the club’s membership, according to the association. the case

The defendants are accused of misrepresenting the value of the Trump Park Avenue property, valuing several units at more than six times what an outside firm estimated in a 2010 appraisal. James Donald Trump Jr. stated the testimony of one of the defendants. this indicated that the company knew the units were rent stabilised, which is why appraisers priced them at a much lower value.

Other Trump companies — the Doral golf resort in Florida, the Old Post Office property he leased for a hotel in Washington and the Trump International Hotel and Tower in Chicago — are charged in the lawsuit, which James said extended loans. those properties due to misrepresentations made by the Trump team to the banks.

James also said Trump’s financial statements describe real estate gains as part of Trump’s liquid assets, when Vornado Partnerships held cash from a real estate trust in which Trump had a minority stake. Doing so contradicted both U.S. accounting principles (known as generally accepted accounting principles, or GAAP), according to the complaint.

“In some years these restricted funds were nearly one-third of Mr. Trump’s reported funds,” the lawsuit said.

Trump’s statements falsely claimed that The lawsuit claims that he had outside help in valuing the property

The lawsuit said no outside professional was engaged to “prepare any of the asset valuations” presented in its annual accounts, despite those statements stating that the valuations were done “with outside professionals.”

“To the extent that Mr. Trump and the Trump Organization received advice from outside professionals that had anything to do with how to value the assets, they disregarded or contradicted conventional advice,” the complaint said.

Jeffrey McConney — a Trump Organization executive and a defendant in the suit — was asked by the attorney general’s office in a 2020 interview about references to outside professionals in Trump’s financial statements, according to the suit.

“Following that conversation, the Trump Organization changed the wording of the 2020 Statement, omitting any representation that a particular assessment was made in consultation with ‘outside professionals’ and instead listed outside professionals as merely one factor that might sometimes be ‘applied’ in an unspecified manner.” , said James’ complaint.

McConney did not respond to CNN’s request for comment.

What penalties does Trump face if the lawsuit is successful?

James said the conduct justifies the suspension of the Trump Organization’s corporate certification, which would force the company to cease operations in New York state.

It is also seeking financial penalties of $250 million in ill-gotten gains.

Additionally, James said Trump and his three oldest children — Trump Jr., Eric and Ivanka — should be barred from serving as officers of any business in New York. The lawsuit seeks to impose several limits on what Trump’s businesses can do going forward, with proposals to bar them from acquiring real estate in the state and applying for loans from chartered New York banks for the next five years.

It also seeks to replace the current trustees of the Donald J. Trump Revocable Trust and appoint an independent monitor to oversee the Trump Organization’s financial dealings for the next five years.

Trump responds with attacks on James

Trump has railed against James on social media since the lawsuit was filed Wednesday.

“I never thought this case would come up,” Trump wrote on Truth Social, accusing James of mounting a sweeping lawsuit to change “his very bad poll numbers.”

Trump’s animosity toward James has spanned years, including when he was president and presided over several lawsuits challenging his administration’s policies.

His personal lawyer, Alina Habba, said in a statement that the case “centered neither on the facts nor the law,” but on “advancing the attorney general’s political agenda.”

“It is very clear that the Attorney General’s Office has exceeded its legal authority by entering into transactions that were not completely wrong,” said Habba. “We are confident that our judicial system will not tolerate this abuse of authority, and we look forward to defending our client against all of the Attorney General’s meritless claims.”

What’s next in the case?

James’ complaint is a civil suit, meaning it could take years for the case to progress through the legal process in the New York state court system before it goes to trial.

The process will take months and months of arguments about what form that trial should take, or even if the case requires going to trial.

James’ office and the defendants may settle the case, although James has resisted that path in recent months when the Trump Organization, according to sources, offered to settle the case to fend them off, though they denied any wrongdoing. James’ office has made it clear it is not interested in a deal, people familiar with the matter said.

However, at the press conference announcing the lawsuit, James said his office’s “doors were open.”

What does this mean for Trump’s criminal exposure?

By launching a civil investigation against Trump, the New York attorney general’s office had a lower burden of proof than would be necessary to bring a criminal case against Trump.

To mount a criminal case, prosecutors would need evidence of Trump’s state of mind and whether he intended to mislead or defraud anyone when he made the statements that misrepresented the value of his assets.

The criminal investigation by Manhattan District Attorney Alvin Bragg’s office is “active and ongoing,” Bragg said in a statement Wednesday. But those investigators, as CNN previously reported, have not been able to get hold of any key people in Trump’s world who could link Trump to the allegedly false ratings.

The district attorney has filed charges against the Trump companies and Allen Weisselberg, the former chief financial officer of the Trump Organization. Weisselberg agreed to a settlement earlier this year.

James also said the conduct was being referred to federal investigators at the U.S. Attorney’s Office in Manhattan and the Internal Revenue Service. His complaint cited federal law that the alleged conduct could “credibly” violate, including bank fraud and false statements to financial institutions.

The U.S. attorney’s office declined to comment. An IRS spokeswoman said the agency receives “potential criminal activity from multiple sources every day,” adding that its agents “review information received for further criminal investigation. The agency “does not confirm investigations until court documents are made public. available,” said the spokesperson.

Regardless of where those references go, James’ lawsuit adds another battle line to the multi-front legal war Trump is fighting. Several of his former White House deputies have testified or been subpoenaed in the Justice Department’s criminal investigation into plots surrounding the 2020 election. His White House documents, which were seized by the FBI from his Florida home in August, are the subject of a DOJ criminal investigation, although that investigation has been restricted pending a third-party review of the materials.

CNN’s Kara Scannell, Curt Devine, Marshall Cohen, Katelyn Polantz and Gabby Orr contributed to this report.