The New York attorney general has cited more than a dozen instances in which she said Donald J. Trump inflated the value of his assets, including his Trump Tower penthouse.
In 2012, Donald J. Trump began to claim that his penthouse apartment in Trump Tower spanned 30,000 square feet, a home so luxurious and vast that it was worth $200 million. By 2015, based on that same square footage, the value had jumped to an astronomical $327 million.
But there was a problem: The triplex was actually about a third of the size that Mr. Trump had said. A top executive at Mr. Trump’s family business later admitted to investigators that the company had overvalued the apartment by “give or take” $200 million.
Mr. Trump’s penchant for hyperbole has defined every stage of his career, from real estate mogul to reality television impresario to U.S. president. And when it comes to business, Mr. Trump has conceded making the occasional exaggeration, once remarking that “everyone” inflated the worth of their assets but that he did not do so “beyond reason.”
But the question of whether such misstatements were simply Trumpian showmanship or a pattern of fraud is now at the heart of the New York attorney general’s civil inquiry into the former president and his family business, the Trump Organization.
On Tuesday, the attorney general, Letitia James, filed court documents that listed what she said were more than a dozen instances of Mr. Trump’s misrepresenting the value of his assets, allowing him to secure financial benefits from lenders, insurers and the Internal Revenue Service. The examples cited in Ms. James’s filings often involved accusations that Mr. Trump used outright falsehoods to inflate his net worth, such as claiming $150,000 golf club initiation fees that he never had collected or seven mansions he never had built but said were worth $161 million.
The inflation — some of it minor, some significant — was incorporated into annual financial statements that Mr. Trump provided to his lenders and others, allowing him to paint a rosy picture of his overall financial health and to receive more favorable loan terms, the filings said.
At the same time, the financial statements contained a number of disclaimers that could undercut Ms. James’s case, including acknowledgments that Mr. Trump’s accountants had not audited or authenticated the claims.
On Wednesday, a spokeswoman for the Trump Organization called the allegations baseless and accused Ms. James, a Democrat who is running for re-election, of leading a politically motivated inquiry, after she ran for office promising to target Mr. Trump.
“Three years later, she is now faced with the stark reality that she has no case,” the spokeswoman said.
Because Ms. James’s investigation is civil, she cannot file criminal charges and would have to instead sue the former president. But if incorporated into a civil claim, her findings — which she said showed that the company had repeatedly engaged in “fraudulent or misleading” business practices — could still cause significant damage to the Trump Organization, a business that gave Mr. Trump a launching pad to the presidency.
Mr. Trump’s allies have privately conceded that Ms. James’s investigation has already produced a steady drumbeat of damaging headlines and steep legal bills.
A lawsuit, legal experts say, would deal an even harsher blow: Ms. James could seek financial penalties and try to shut down certain aspects of Mr. Trump’s business in New York.
“This is a real shot across the bow to make very clear how serious the attorney general is about progressing the case,” said E. Danya Perry, a partner at Perry Guha, a law firm that specializes in white-collar crime, who served as a deputy New York state attorney general while leading an anticorruption commission.
Ms. Perry said that such a lawsuit could make it even more difficult for the company to obtain loans and to conduct business with government entities.
Still, Ms. James’s authority can stretch only so far. Mr. Trump has already begun to close the New York chapter of his career, having moved to Florida after leaving the White House and focusing on a new social media venture fueled by his popularity with millions of Americans.
And although Mr. Trump’s company still has its headquarters in Trump Tower in Midtown Manhattan, most of his hotels, golf clubs and commercial real estate properties are spread across the country and abroad. To close the company’s remaining New York properties, Ms. James would most likely need to prove that each was involved in a pattern of fraud.
“The question here is whether there is repeated fraud or repeated illegal acts,” said Harlan Levy, a former chief deputy attorney general in New York and a partner at Foley Hoag, a Boston-based law firm. He said that the New York law granting Ms. James powers to conduct a civil investigation into fraud made it much easier for her to bring a case than it would be for law enforcement authorities pursuing criminal charges.
But he said that the repercussions, while significant, might only go so far. “It’s unlikely that the attorney general would in fact shut down the business,” he said.
Ms. James’s filings came in response to a motion by Mr. Trump’s lawyers seeking to block her from questioning him and two of his adult children under oath. The attorney general responded by saying that while her office had compiled reams of evidence, she needed to interview the Trump family members to determine who was responsible for the misrepresentations, and whether they were intentional.
Ms. James’s office is also participating in the criminal investigation into Mr. Trump that is led by the Manhattan district attorney, Alvin Bragg, and focuses on some of the same conduct, including inflated values that may have appeared on the company’s annual financial statements. In July, the district attorney’s office indicted the Trump Organization and its longtime chief financial officer on unrelated tax charges, and its investigation into Mr. Trump is continuing.
The Trump Investigations
Numerous inquiries. Since former President Donald Trump left office, there have been many investigations and inquiries into his businesses and personal affairs. Here’s a list of those ongoing:
Lawyers for the Trump family have argued that Ms. James is attempting to sidestep the grand jury process in the criminal investigation by questioning Mr. Trump and two of his adult children, Donald Trump Jr. and Ivanka Trump, as part of her civil inquiry.
In December, Mr. Trump sued Ms. James, accusing her of carrying out a partisan witch hunt and violating his constitutional rights. Mr. Trump’s lawsuit seeks to halt Ms. James’s civil investigation and remove her from any involvement in Mr. Bragg’s criminal inquiry.
On Wednesday, Alan S. Futerfas, a lawyer for Donald Trump Jr. and Ms. Trump, said in a statement that the attorney general’s court papers did not address the central arguments the family raised in their effort to block the questioning, which included several examples of Ms. James saying publicly that she would use her office to pursue a case against Mr. Trump and his business.
“In 160 pages of legal briefing, the attorney general’s office deliberately fails to address Ms. James’s repeated threats to target the Trump family,” the statement said.
Ms. James did not go quite so far as to accuse Mr. Trump of committing fraud, saying instead that his actions were either “fraudulent or misleading” and that the evidence she had uncovered “suggests” that the company misrepresented the value of its assets.
Mr. Trump’s lawyers are likely to argue that property valuations are subjective and can ebb and flow from year to year.
But in more than 100 pages, Ms. James laid out examples of what she said were misrepresentations about some of his high-profile properties, from his flagship building on 40 Wall Street in Manhattan to his golf clubs in New York, California and Scotland.
Along the way, her lawyers uncovered new examples of Mr. Trump’s well-known tendency to make exaggerated statements. In one instance, their filing said, Mr. Trump had claimed that 16 lots on his golf course in Los Angeles should be valued higher than others, because they were in a “more prestigious ZIP code.” But when one of Mr. Trump’s associates looked to confirm that, she found that the lots were in the same ZIP code as their neighbors.
And Mr. Trump seemed to have particular difficulty restraining himself when it came to the value of his own home. Not only did Ms. James say that he had claimed that his Fifth Avenue apartment was 20,000 square feet larger than it was; she also found that he had valued its price per square foot at colossal amounts: in 2012, at $6,666 per square foot and three years later, at $10,900. By comparison, residences nearby, including within Trump Tower itself, have sold for about a quarter of that higher price.
Even if Ms. James prevails in her effort to question Mr. Trump and his adult children, they would be likely to invoke their constitutional right to avoid self-incrimination by declining to answer questions.
When her office questioned another of Mr. Trump’s sons, Eric Trump, in October 2020, he invoked his Fifth Amendment right against incriminating himself in response to more than 500 questions, her new court filing said. But unlike in a criminal case, a judge or jury weighing Ms. James’s accusations against Mr. Trump could hold the Trump executives’ silence against them.
